Exhibit 13




---



##### 



facts




---



##### 



Our Story
      09 Table of contents
  IntroductionLetter from the CFO
    
    
    2Comparison to Peers
    
    
    3PotashCorp at a Glance
    
    
    4Managements Discussion & AnalysisThe
Global Development Story
    
    
    6Company Overview
    
    
    8Factors That Shaped Our Business in 2009
    
    
    12PotashOverview
    
    
    15Strategy
    
    
    19Capability to Deliver
    
    
    20Risks to Our Potash Strategy
    
    
    21Performance
    
    
    23PhosphateOverview
    
    
    25Strategy
    
    
    26Capability to Deliver
    
    
    26Risks to Our Phosphate Strategy
    
    
    27Performance
    
    
    29NitrogenOverview
    
    
    31Strategy
    
    
    33Capability to Deliver
    
    
    33Risks to Our Nitrogen Strategy
    
    
    33Performance
    
    
    35
 2010 Outlook
    
    
    37Key Performance Drivers
    
    
    39Rewarding Results
    
    
    44Risk Management
    
    
    452009 Financial Overview
    
    
    47Expenses & Other Income
    
    
    49Quarterly Results
    
    
    52Key Earnings Sensitivities
    
    
    54Financial StructureFinancial Condition Review
    
    
    54Liquidity & Capital Resources
    
    
    56Capital Structure & Management
    
    
    58Market Risks
    
    
    60Related Party Transactions
    
    
    60Critical Accounting Estimates
    
    
    60Recent Accounting Changes
    
    
    6511 Year Report
    
    
    75FinancialsFinancial Performance Indicators
    
    
    76Managements Responsibility for Financial Reporting
    
    
    79Independent Registered Chartered Accountants Reports
    
    
    80Consolidated Financial Statements
    
    
    82Appendix
    
    
    135




---



##### 



facts
 6.9 billion people
    
    (IMAGE)need food
    
    (IMAGE)food needs fertilizer
    
    (IMAGE)we have more than anyone
    
    (IMAGE)




---



##### 



CFO LETTER February 19, 2010
  
  PotashCorp 2009 Financial Review   2     Wayne Brownlee,
 
 
 (BAR GRAPH)
    
    (BAR GRAPH)




---



##### 



3   PotashCorp 2009 Financial Review
  
  COMPARISON TO PEERS Peers in Our Industry
  
 Comparability of Peer Information
   (BAR CHART)
    
    (BAR CHART)
 
 Sources: Company financial reports
 
 *
    
    Capital expenditures = additions to property, plant and equipment1
    
    Year ended December 31, 20092
    
    Most recent four fiscal quarters ended November 30, 20093
    
    Most recent four fiscal quarters ended September 30, 20094
    
    Most recent two fiscal halfs ended June 30, 2009
Uralkali net income, cash flow from operations and capital expenditures translated by half at: 2nd
Half 2008 1 USD = RUB 25.8129; 1st Half 2009 1 USD = RUB 33.1116; average exchange rates in each
half per Bloomberg5
    
    Yara net income, cash flow from operations and capital expenditures translated
at 1 USD = NOK 6.2204, average exchange rate for 2009 as provided from
company reports6
    
    K+S net income, cash flow from operations and capital expenditures translated by
quarter at: Q4 2008 1 USD = EUR 0.7575; Q1 2009 1 USD = EUR 0.7655;
Q2 2009
1 USD = EUR 0.7337; and Q3 2009 1 USD = EUR 0.6992; average exchange rates in each quarter per
Bloomberg7
    
    APC net income, cash flow from operations and capital
expenditures translated at 1 USD = JOD 0.7081, average exchange rate
for period per Bloomberg




---



##### 



POTASHCORP AT A GLANCE
  
  PotashCorp 2009 Financial Review   4 Our Nutrients
 POTASH
    
    PHOSPHATE
    
    NITROGEN     Mined from evaporated
sea deposits     As fertilizer: improves
root strength and disease
resistance, enhances
taste,
color and texture of food     As feed: aids animal
growth
and milk production     Used in industrial
products
(food products, soaps,
water softeners)
    
         Mined from ancient
sea fossils     As fertilizer: aids in
photosynthesis, speeds
crop maturity     As feed: assists in muscle
repair and skeletal
development     Used
in industrial products (soft drinks, food additives, metal treatment)
    
         Synthesized from air using
steam and natural gas     As fertilizer: builds proteins
and enzymes, speeds plant
growth     As feed: essential to RNA,
DNA and cell maturation     Used in industrial products
(plastics, resins,
adhesives)Share of 2009 Gross
Margin
    
    Share of 2009 Gross Margin
    
    Share of 2009 Gross
Margin71%
    
    
    10%
    
    
    19%
 A Comparison View of Our Nutrients
 The Potash Advantage Over Other NutrientsPotash (KCI)
    

Phosphate (P2O5)
    
    Nitrogen (NH3)PotashCorp % of World Capacity*
1
    
    20%
    
    5%
    
    2%#1 in world
    
    #3 in world
    
    #3 in world# of Producing Countries 2
    
    12
    
    ~ 40
    
    ~ 60% of Government Control 3
    
    20%
    
    50%
    
    51%Time for Greenfield 4
(including ramp-up) 5
    
    Minimum 7 years
    
    3-4 years
    
    3 yearsCost of Greenfield 6
    
    CDN $2.8 billion** 2 million tonnes KCI
    
    US $1.5 billion*** 1 million
tonnes
P2O5
    
    US $1.4 billion**** 1 million tonnes NH3
 
 *
    
    Based on our nameplate capacity. See Potash Production table on Page 24 for further information.**
    
    Estimated costs for a conventional greenfield mine in Saskatchewan, excluding infrastructure
outside of plant gate (rail, road networks, utility systems, port facilities, etc.) and,
if applicable, cost of deposits. Factoring these in, total estimated costs could exceed CDN $4
billion.***
    
    Phosphate rock mine, sulfuric acid plant, phosphoric acid plant and DAP/MAP
granulation plant****
    
    Ammonia/urea complex




---



##### 



5   PotashCorp 2009 Financial Review Key Financial Results
 (BAR GRAPH)
    
    (BAR GRAPH)Potash continues to be the driver of
our results. Even in a year when
sales volumes declined by 65
percent, margins remained strong and
potash accounted for 71 percent of
our total gross margin.
    
    Each nutrient contributed favorably
to our gross margin in 2009, but
potash margin as a percentage of net
sales continued to be well above
those of phosphate and nitrogen.(BAR CHART)
    
    (BAR CHART)PotashCorps 2009 EBITDA was $1.5
billion, our third strongest year
ever despite significantly lower
potash volumes and reduced margins
in all three nutrients.
    
    We spent nearly $1.8 billion in
2009, primarily on our potash
capacity expansion projects, as we
remain committed to preparing our
company for the expected growth in
demand in coming years.(BAR CHART)
    
    (BAR CHART)We generated a CFR of 13.6 percent,
above our weighted average cost of
capital (WACC).
    
    During 2009 we capitalized on our
ability to access favorable
long-term debt financing terms and
issued $2 billion of senior notes to
help fund our potash expansion
commitments.
 
 1 See reconciliation and description of non-GAAP measures on Pages 76-78.* Earnings Before Interest, Taxes, Depreciation and Amortization.




---



##### 



MANAGEMENTS DISCUSSION & ANALYSIS
 
 PotashCorp 2009 Financial
Review   6 
 The
Global Development Story
 fact More Food Is Needed
  1 Population and Income Are Growing in Tandem
   2 Demand for Food Continues to Grow
   3 More People Able to Buy More Food Strains Grain Supplies
  (BAR GRAPH)
    
    (BAR CHART)

    (BAR GRAPH)




---



##### 



The
following discussion and analysis is the responsibility of management
and is as of February 19,
2010. The Board of Directors carries out its responsibility for review of this disclosure
principally through its audit committee, comprised exclusively of independent directors. The audit
committee reviews this disclosure and recommends its approval by the Board of Directors. Additional
information relating to PotashCorp (which is not incorporated by
reference herein) can be found in our regulatory filings on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
 7   PotashCorp 2009 Financial Review
 fact More Fertilizer Is Required
  1 Arable Land per Capita Is Shrinking
  2 Low Yields in Developing Countries Reflect Fertility Imbalance
  3 Strong Crop Prices Should Encourage Increased Production
  (BAR GRAPH)
    
    (BAR CHART)
    
    (BAR GRAPH)




---



##### 



COMPANY OVERVIEW
  
  PotashCorp 2009 Financial
Review   8 6 Keys to Understanding PotashCorp
  1 Our Business Is Meeting World Need for Fertilizer
   
 (BAR GRAPH)
    
    (BAR CHART)




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##### 



9   PotashCorp 2009 Financial Review   2 We Invest in Potash Because of Its Advantages
  3 We Are Primarily a Potash Producer
   4 Focused Strategies in Each Nutrient
 Potash Provides Earnings Quality  Growth With Reduced Volatility
   Phosphate and Nitrogen Add Strength and Depth
   (BAR GRAPH)
    
    (BAR GRAPH)




---



##### 



COMPANY OVERVIEW
  
  PotashCorp 2009 Financial Review   10   5 We Expect Rising Potash Demand and Can Deliver
 Preparing to Respond
    
 17.1 MMT
 Operational capability available by 2015
 
 L to R
Rob Jaspar   Bill Doyle   Jane Irwin




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##### 



11   PotashCorp 2009 Financial Review Uniquely Positioned
  
    
    An experienced management team that can conceive, develop and implement long-term strategies
and commit the company to them
 
    
    A strong balance sheet with low debt to equity enables us to take advantage of strategic
opportunities and withstand short-term business fluctuations
 
    
    A skilled and productive workforce, motivated sales teams and an extensive transportation
network to serve our target markets.
 6 Our Core Values Are Key




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##### 



FACTORS THAT SHAPED OUR BUSINESS IN 2009
  
  PotashCorp 2009 Financial Review   12 1 Economic Crisis, Price Volatility Made Consumers Cautious
  2 Decline in Fertilizer Use Was Unprecedented
  3 Global Potash Distributors Destocked Their Inventories
  4 World Soil Potash Levels Were Mined and Yields Reduced
   (LINE GRAPH)
    
    (BAR CHART)
    
    (BAR CHART)




---



##### 



13   PotashCorp 2009 Financial Review  5 Potash Buyers Remained on the Sidelines
   6 Potash Demand, Operating Rates Down but Margins Remained Strong
   7 Farmers Began to Engage Later in the Year
   (BAR GRAPH)
    
    (BAR CHART)
    
    (BAR GRAPH)




---



##### 



FACTORS THAT SHAPED OUR BUSINESS IN 2009
  
  PotashCorp 2009 Financial Review   14 8 Indias Demand for DAP Remained Strong
   9 Phosphate Product Prices, Input Costs Were Volatile
  10 US Nitrogen Production Became More Competitive
  11 Global Ammonia Trade Declined
   (BAR GRAPH)
    
    (BAR CHART)
    
    (LINE GRAPH)




---



##### 



Potash
 L to
R   Daphne Arnason   Garth Moore   John Hunt




---



##### 



Potash SWOT
 STRENGTHS
 
    
    Can substantially raise capacity at a significant
discount to and in less time than comparable
greenfield capacity
    
    Low-cost, flexible production with small percentage
of fixed costs when operating at close to capacity
    
    Per-tonne fixed costs and mining taxes decrease as
sales volumes increase
    
    Existing operations have significant reserves,
resources and mine lives, and are located in
geopolitically stable environments
    
    Offshore investments add global reach and profitability
    
    Depth and tested experience of management team
    
    Substantial barriers to entry; economically mineable
deposits are rare, capital costs are high and lead
times are long
    
    Few world producers, little government ownership
    
    No known substitutes for potash
 WEAKNESSES
 
    
    High rail and ocean freight delivery costs for
Saskatchewan potash; potential for transportation
bottlenecks
    
    Water inflow at our New Brunswick mine, and at
Esterhazy SK where our mineral rights are mined
by another company, increases costs and risks loss
of production
    
    Production costs exposed to Canadian dollar
volatility
    
    High Saskatchewan resource taxes and federal
and provincial income taxes relative to global
competitors
 OPPORTUNITIES
 
    
    Capacity additions could give us a larger share of a
growing market
    
    Rising global demand for food, coupled with the
need to address nutrient imbalances in developing
nations, could accelerate long-term growth
expectations for potash consumption
    
    Expansion of granular capacity to meet increasing
demand for blended fertilizer in developing markets
 THREATS
 
    
    Upward pricing trend may attract competitor
greenfield projects
    
    Demand can be temporarily affected by volatile crop
prices causing changes in consumption patterns
    
    Our strategy of matching production to
market demand means PotashCorp can be
disproportionately affected by market weakness,
particularly in the short term
 fact the world needs fertilizer




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##### 



15   PotashCorp 2009 Financial Review
  
  POTASH OVERVIEW
 The Potash Business: The Simple Things That Matter
 Potash Has Unique Advantages
  Economically Mineable Potash Deposits Are Rare
  Significant Cost and Time to Build New Capacity
  Few Producers and Limited Government Ownership
  Long-Term Growth in Demand Requires New Supply
   SNAPSHOT OF POTASH
 Strategies
    
    Risks
    
    Mitigation
    
    Capability to DeliverAs demand grows, bring on 
capacity at much lower cost 
than greenfield
    
    Potential for reduced prices
if supply rises faster than
consumption or if demand is
insufficient to consume new capacity
    
    Pace internal growth to rising
market demand, and match
production to demand Work with partners to ensure
adequate transportation
infrastructure
    
    Four expansion projects
completed, four underway,
contributing to 17.1 MMT of
operational capability by 2015Short-term distribution problems
could adversely affect sales
    
    
    Canpotex and PotashCorp
expanding distribution system
capabilityMatch production to market
demand to enhance stability
    
    Lost production, higher
per-tonne operating costs
    
    Structure operations so majority
of costs are variable, and
production can be varied
economically
    
    Of total potash operating costs,
approximately 70% are variable
when producing at close to
operational capability




---



##### 



POTASH
  
  PotashCorp 2009 Financial Review   16 PotashCorp: The Simple Fact Is We Focus on Potash
 Unmatched Assets, Greatest Opportunity for Growth
    Leveraged to Offshore Growth
    Strategic Investments Add Value, Broaden Our Enterprise
  Sociedad Quimica y Minera
  (BAR GRAPH)
    
    (BAR CHART)




---



##### 



17   PotashCorp 2009 Financial Review Arab Potash Company
  Israel Chemicals Ltd.
  Sinofert Holdings Limited
  Offshore Sales and Logistics
   
    
    China has historically bought from Canpotex under calendar-year price and volume contracts;
    
    Japan, Korea and Taiwan buy from Canpotex under six-month price and volume contracts;
    
    India has traditionally bought from Canpotex under six- to 12-month price and volume contracts;
    
    Brazil buys from Canpotex and PCS Sales on the spot market;
    
    Southeast Asian countries, including Malaysia, Indonesia, Vietnam, Thailand and the Philippines, buy from Canpotex on the spot market.
 (PIE CHART)
    
    (BAR GRAPH)




---



##### 



POTASH
  
  PotashCorp 2009 Financial Review   18   North American Sales and Logistics
  Global and North American Competitors




---



##### 



19   PotashCorp 2009 Financial Review 
 POTASHCORPS STRATEGY
 Building Capacity to Match Rising Demand
   Produce to Meet Market Demand
   (BAR GRAPH)
    
    (BAR GRAPH)
 fact
 Potash increases plant tolerance
to drought and disease/insect resistance,
while improving food taste and nutritional value




---



##### 



POTASH
  
  PotashCorp 2009 Financial Review   20  CAPABILITY TO DELIVER
 We Will Be Ready When the World Calls for Potash
     Standard Capacity*Expansions/
    
    InvestmentFacility
    
    Debottlenecking
    
    (Billions $CDN)Construction Projects CompletedRocanville
    
    0.75 MMT
    
    $
    0.13Allan
    
    0.40 MMT
    
    $
    0.21Lanigan
    
    1.50 MMT
    
    $
    0.41Patience Lake
    
    0.36 MMT
    
    $
    0.11Projects in ProgressCory I
    
    1.20 MMT
    
    $
    0.90New Brunswick
    
    1.20 MMT
    
    $
    1.66Allan
    
    1.00 MMT
    
    $
    0.55Cory II
    
    1.00 MMT
    
    $
    0.54Rocanville
    
    2.70 MMT
    
    $
    2.80
 *
    
    Includes, as applicable, both bringing back
previously idled capacity and expansions to
capacity and does not necessarily reflect
current operational capability
  Investing in the Transportation and Distribution Infrastructure
      Our Production Relies on Skilled Labor




---



##### 



21   PotashCorp 2009 Financial Review 
 RISKS TO OUR POTASH STRATEGY
  New Supply Creates Market Imbalance
  Global Demand Insufficient to Consume PotashCorp Capacity
   Lack of Adequate Transportation and Distribution Infrastructure
   Underground Mines Face Particular Risks
   (BAR GRAPH)
    
    (BAR GRAPH)




---



##### 



POTASH
  
  PotashCorp 2009 Financial Review   22 Potash Results
 % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    (Decrease)
    
    
    Tonnes (thousands)
    
    
    (Decrease)
    
    
    Average per Tonne1
    
    
    (Decrease)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Sales
    
    $
    1,315.8
    
    
    $
    4,068.1
    
    
    $
    1,797.2
    
    
    
    (68
    )
    
    
    126Freight
    
    
    58.5
    
    
    
    167.3
    
    
    
    178.1
    
    
    
    (65
    )
    
    
    (6
    )Transportation and
distribution
    
    
    35.3
    
    
    
    42.1
    
    
    
    39.1
    
    
    
    (16
    )
    
    
    8Net sales
    
    $
    1,222.0
    
    
    $
    3,858.7
    
    
    $
    1,580.0
    
    
    
    (68
    )
    
    
    144Manufactured productNet salesNorth American
    
    $
    506.8
    
    
    $
    1,307.5
    
    
    $
    656.9
    
    
    
    (61
    )
    
    
    99
    
    
    
    1,093
    
    
    
    2,962
    
    
    
    3,471
    
    
    
    (63
    )
    
    
    (15
    )
    
    $
    463.74
    
    
    $
    441.38
    
    
    $
    189.26
    
    
    
    5
    
    
    
    133Offshore
    
    
    698.9
    
    
    
    2,526.8
    
    
    
    909.6
    
    
    
    (72
    )
    
    
    178
    
    
    
    1,895
    
    
    
    5,585
    
    
    
    5,929
    
    
    
    (66
    )
    
    
    (6
    )
    
    $
    368.84
    
    
    $
    452.43
    
    
    $
    153.41
    
    
    
    (18
    )
    
    
    1951,205.7
    
    
    
    3,834.3
    
    
    
    1,566.5
    
    
    
    (69
    )
    
    
    145
    
    
    
    2,988
    
    
    
    8,547
    
    
    
    9,400
    
    
    
    (65
    )
    
    
    (9
    )
    
    $
    403.56
    
    
    $
    448.60
    
    
    $
    166.65
    
    
    
    (10
    )
    
    
    169Cost of goods sold
    
    
    466.2
    
    
    
    783.8
    
    
    
    658.8
    
    
    
    (41
    )
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    156.07
    
    
    $
    91.69
    
    
    $
    70.09
    
    
    
    70
    
    
    
    31Gross margin
    
    
    739.5
    
    
    
    3,050.5
    
    
    
    907.7
    
    
    
    (76
    )
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    247.49
    
    
    $
    356.91
    
    
    $
    96.56
    
    
    
    (31
    )
    
    
    270Other
miscellaneous and
purchased productNet sales
    
    
    16.3
    
    
    
    24.4
    
    
    
    13.5
    
    
    
    (33
    )
    
    
    81Cost of goods sold
    
    
    25.4
    
    
    
    19.4
    
    
    
    8.9
    
    
    
    31
    
    
    
    118Gross margin
    
    
    (9.1
    )
    
    
    5.0
    
    
    
    4.6
    
    
    
    n/m
    
    
    
    9Gross Margin
    
    $
    730.4
    
    
    $
    3,055.5
    
    
    $
    912.3
    
    
    
    (76
    )
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    244.44
    
    
    $
    357.49
    
    
    $
    97.05
    
    
    
    (32
    )
    
    
    268
 Note 19 to the consolidated financial statements
provides information pertaining to our business
segments.1
    
    Rounding differences may occur
due to the use of whole dollars in per-tonne
calculations.n/m = not meaningful
 Potash gross margin variance attributable to:
 2009 vs 2008Change in
    
    Change in Prices/CostsSales
    
    
    
    
    
    Cost ofVolumes
    
    Net Sales
    
    Goods Sold
    
    TotalManufactured productNorth American
    
    $
    (716.7
    )
    
    $
    24.4
    
    
    $
    (23.9
    )
    
    $
    (716.2
    )Offshore
    
    
    (1,462.1
    )
    
    
    (158.4
    )
    
    
    25.7
    
    
    
    (1,594.8
    )Change in market mix
    
    
    0.7
    
    
    
    (0.6
    )
    
    
    (0.1
    )
    
    
    Total manufactured product
    
    $
    (2,178.1
    )
    
    $
    (134.6
    )
    
    $
    1.7
    
    
    
    (2,311.0
    )Other miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14.1
    )TOTAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,325.1
    )




---



##### 



23   PotashCorp 2009 Financial Review  POTASH PERFORMANCE: 2009 vs 2008 1
 1
    
    Direction of arrows refers to impact on gross margin
 Net Sales Prices
 6
    
    Price increases in key offshore markets carried over from 2008 to the first half of 2009
were more than offset by price declines in many markets subsequent to the contract settlement
with India in the third quarter of 2009.5
    
    Average North American realized prices up as 2008 price increases
largely carried over into the first half of 2009 and US list price
reductions were not introduced until the third quarter of 2009.6
    
    Substantial consumption drop pressured pricing, and fixed transportation and distribution
costs were spread over fewer sales tonnes.6
    
    North American prices affected by the high proportion of industrial volumes relative to
fertilizer.
 Sales Volumes
 6
    
    Worldwide volumes were weak. Customers continued to be cautious, resulting in an
unprecedented decline in potash sales volumes. Buyers purchased primarily just-in-time,
working through inventories and reducing fertilizer applications.6
    
    Canpotex did not sign a contract with China in 2009. Chinas imports from international
potash suppliers declined by an estimated 60 percent year over year due to higher opening
inventories, reduced potash consumption and higher domestic production. Although imports and
consumption declined from 2008, India began restocking mid-2009 and took more tonnes from
Canpotex than any other region.
 Cost of Goods Sold
 5
    
    Reduced brine inflow management costs with stable brine inflow
rate at New Brunswick caused offshore cost variance to be
positive (production mainly sold in the offshore markets).6
    
    All per-tonne costs were exacerbated by fewer production tonnes over which to allocate
costs.6
    
    Labor costs higher due to increased staffing levels, and due
to increased wages that resulted from
new union contracts signed at the end of 2008.5
    
    Strike-related costs incurred in 2008, not in 2009.6
    
    Royalty costs higher due to higher average North American list prices per tonne for much of
the year.5
    
    The Canadian dollar weakened relative to the US dollar.
 (LINE CHART)
    
    (BAR GRAPH)
    
    (BAR GRAPH)




---



##### 



POTASH
  
  PotashCorp 2009
Financial Review   24  Percentage of Annual Sales Volumes
    
    Increase (Decrease)
    
    % Increase (Decrease)2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2009
    
    2008China
    
    
    6
    
    
    
    13
    
    
    
    26
    
    
    
    (7
    )
    
    
    (13
    )
    
    
    (54
    )
    
    
    (50
    )India
    
    
    32
    
    
    
    16
    
    
    
    10
    
    
    
    16
    
    
    
    6
    
    
    
    100
    
    
    
    60Other Asian
countries
    
    
    43
    
    
    
    39
    
    
    
    33
    
    
    
    4
    
    
    
    6
    
    
    
    10
    
    
    
    18Latin America
    
    
    13
    
    
    
    25
    
    
    
    26
    
    
    
    (12
    )
    
    
    (1
    )
    
    
    (48
    )
    
    
    (4
    )Oceania and Europe
    
    
    6
    
    
    
    7
    
    
    
    5
    
    
    
    (1
    )
    
    
    2
    
    
    
    (14
    )
    
    
    40100
    
    
    
    100
    
    
    
    100
 2008 vs 2007 1
 1
    
    Direction of arrows refers to impact on gross margin
 Net Sales Prices
 5
    
    Record 169 percent increase in realized sales prices caused by tight market supply and higher crop commodity prices for most of 2008.5
    
    Significantly increased prices to China, Brazil, India and Southeast Asia over 2007.5
    
    Driven by low global grain stocks and record-setting crop prices in key emerging markets, offshore price increases outpaced those in
North America, particularly in the first half of 2008 (first time since 2002).
 Sales Volumes
 6
    
    Available supplies limited by labor disputes at three of our mines while demand fell due to
the start of the global economic crisis in late 2008.5
    
    Pattern of offshore potash shipments altered in 2008 by a late
contract settlement between Canpotex and China. India benefited
from Chinas late entry to the market, receiving nearly 60 percent
more potash from Canpotex than in 2007.6
    
    North American sales volumes fell as farmers mostly passed on a fall application due to the
late harvest and unfolding global economic concerns.
 Cost of Goods Sold
 6
    
    Royalties increased due to higher sales prices.6
    
    Higher brine inflow costs at New Brunswick.6
    
    Strike-related costs in 2008 compared to none in 2007.6
    
    Stronger Canadian dollar in 2008 compared to 2007.
 
 Potash Production
 Nameplate
    
    Operational
    
    Production
    
    Mine SiteCapacity1
    
    Capability (2010)2
    
    2009
    
    2008
    
    2007
    
    EmployeesLanigan SK
    
    
    3.828
    
    
    
    3.600
    
    
    
    0.702
    
    
    
    2.141
    
    
    
    1.907
    
    
    
    509Rocanville SK
    
    
    3.044
    
    
    
    2.800
    
    
    
    0.949
    
    
    
    2.834
    
    
    
    2.647
    
    
    
    395Allan SK
    
    
    1.885
    
    
    
    1.800
    
    
    
    0.686
    
    
    
    1.093
    
    
    
    1.744
    
    
    
    349Cory SK
    
    
    1.361
    
    
    
    0.800
    
    
    
    0.416
    
    
    
    0.420
    
    
    
    0.768
    
    
    
    344Patience Lake SK
    
    
    1.033
    
    
    
    0.500
    
    
    
    0.101
    
    
    
    0.282
    
    
    
    0.257
    
    
    
    80Esterhazy SK3
    
    
    1.313
    
    
    
    0.943
    
    
    
    0.276
    
    
    
    1.125
    
    
    
    1.043
    
    
    
    0New Brunswick NB
    
    
    0.800
    
    
    
    0.800
    
    
    
    0.275
    
    
    
    0.802
    
    
    
    0.793
    
    
    
    337TOTAL
    
    
    13.264
    
    
    
    11.243
    
    
    
    3.405
    
    
    
    8.697
    
    
    
    9.159
    
    
    
    2,014
 1
    
    Includes, where applicable, previously idled capacity that can be brought into operation with capital investment (debottlenecking projects).2
    
    Estimated annual achievable production levels.3
    
    PotashCorps mineral rights at Esterhazy are mined by Mosaic Potash Esterhazy Limited Partnership under a mining and processing long-term agreement. For calendar year 2010, our production allocation,
subject to any force majeure conditions, is 0.943 million tonnes.




---



##### 



Phosphate
 L to
R   David Delaney   Joe Podwika   Tom Regan




---



##### 



Phosphate SWOT
 STRENGTHS
 
    
    High-quality, low-cost phosphate rock in
significant quantity provides cost advantage
over non-integrated producers
    
    Permit to mine for more than 30 years at Aurora NC
    
    Ability to direct rock with low levels of impurities
to diversified product line to optimize margins and
reduce volatility
    
    Mining near processing facilities provides cost
advantage over North American competitors
    
    Strong position in North American purified acid,
feed phosphate and liquid fertilizer markets
 WEAKNESSES
 
    
    Transporting ammonia to solid fertilizer plants is
becoming more difficult and costly
    
    Higher sulfur and ammonia costs can negatively
impact margins
    
    Plants with high fixed costs may not perform
profitably at lower operating rates
 OPPORTUNITIES
 
    
    Balanced phosphate rock, phosphoric acid and
solid fertilizer fundamentals expected in the
medium term
    
    Few companies with rock of sufficient quality to
profitably produce purified acid
    
    Potential for non-integrated producers to curtail
production due to higher rock costs
 THREATS
 
    
    Significant government control in global phosphate
supply and consumption decisions
    
    High barriers to exit because of significant
environmental restoration and remediation costs
    
    Extensive environmental and permitting
requirements
 fact the world needs fertilizer




---



##### 



25   PotashCorp 2009 Financial Review
  
  PHOSPHATE OVERVIEW
 The Phosphate Business: The Simple Things That Matter
 Success Begins With Quality Rock
   Market Structure May Encourage Volatility
   Changing Costs of Raw Materials
  Limited Growth in Phosphate Capacity in the Near Future
  PotashCorp: The Simple Fact Is We Are Flexible
 Our Rock Makes Product Diversification Possible
  Greater Stability Provided by Feed and Industrial
  SNAPSHOT OF PHOSPHATE
 Strategy
    
    Risk
    
    Mitigation
    
    Capability to DeliverOptimize product mix to
maximize gross margin and
reduce volatility
    
    Short-term cyclicality due to
fluctuations in demand, cost
volatility,
availability of supply and
government involvement in
the industry
    
    Leverage strengths in less-
cyclical industrial and feed
products; optimize fertilizer
operations to minimize
production costs
    
    New permits at Aurora allow for
more than 30 years of mining
Completed a new sulfuric acid
plant in 2009 that will enable
productive capability to meet
stated phosphoric acid capacities




---



##### 



PHOSPHATE
  
  PotashCorp 2009
Financial Review   26    Phosphate Sales and Logistics
  Global and North American Competitors
  
 POTASHCORP STRATEGY
 Use Our Product Flexibility to Maximize Returns and Stability
   
 CAPABILITY TO DELIVER
 Delivering Product Diversity
   (PIE CHART)
    
    (BAR CHART)




---



##### 



27   PotashCorp 2009 Financial Review 
 RISK TO OUR PHOSPHATE STRATEGY
 Cyclicality
  
  (BAR GRAPH)
    
    (BAR CHART)




---



##### 



PHOSPHATE
  
  PotashCorp 2009
Financial Review   28 Phosphate Results
 % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    (Decrease)
    
    
    Tonnes (thousands)
    
    
    (Decrease)
    
    
    Average per Tonne1
    
    
    (Decrease)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Sales
    
    $
    1,374.4
    
    
    $
    2,880.7
    
    
    $
    1,637.1
    
    
    
    (52
    )
    
    
    76Freight
    
    
    83.4
    
    
    
    101.1
    
    
    
    112.4
    
    
    
    (18
    )
    
    
    (10
    )Transportation
and distribution
    
    
    37.9
    
    
    
    39.4
    
    
    
    33.4
    
    
    
    (4
    )
    
    
    18Net sales
    
    $
    1,253.1
    
    
    $
    2,740.2
    
    
    $
    1,491.3
    
    
    
    (54
    )
    
    
    84Manufactured productNet salesFertilizer  liquids
    
    $
    235.2
    
    
    $
    734.6
    
    
    $
    283.4
    
    
    
    (68
    )
    
    
    159
    
    
    
    791
    
    
    
    893
    
    
    
    983
    
    
    
    (11
    )
    
    
    (9
    )
    
    $
    297.53
    
    
    $
    823.17
    
    
    $
    288.37
    
    
    
    (64
    )
    
    
    185Fertilizer  solids
    
    
    354.2
    
    
    
    996.8
    
    
    
    607.5
    
    
    
    (64
    )
    
    
    64
    
    
    
    1,182
    
    
    
    1,069
    
    
    
    1,623
    
    
    
    11
    
    
    
    (34
    )
    
    $
    299.51
    
    
    $
    932.44
    
    
    $
    374.22
    
    
    
    (68
    )
    
    
    149Feed
    
    
    260.0
    
    
    
    492.9
    
    
    
    272.7
    
    
    
    (47
    )
    
    
    81
    
    
    
    531
    
    
    
    654
    
    
    
    814
    
    
    
    (19
    )
    
    
    (20
    )
    
    $
    489.78
    
    
    $
    753.90
    
    
    $
    335.03
    
    
    
    (35
    )
    
    
    125Industrial
    
    
    386.6
    
    
    
    471.0
    
    
    
    277.4
    
    
    
    (18
    )
    
    
    70
    
    
    
    551
    
    
    
    706
    
    
    
    731
    
    
    
    (22
    )
    
    
    (3
    )
    
    $
    701.62
    
    
    $
    666.97
    
    
    $
    379.47
    
    
    
    5
    
    
    
    761,236.0
    
    
    
    2,695.3
    
    
    
    1,441.0
    
    
    
    (54
    )
    
    
    87
    
    
    
    3,055
    
    
    
    3,322
    
    
    
    4,151
    
    
    
    (8
    )
    
    
    (20
    )
    
    $
    404.60
    
    
    $
    811.50
    
    
    $
    347.14
    
    
    
    (50
    )
    
    
    134Cost of goods sold
    
    
    1,144.1
    
    
    
    1,591.3
    
    
    
    1,019.5
    
    
    
    (28
    )
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    374.52
    
    
    $
    479.17
    
    
    $
    245.60
    
    
    
    (22
    )
    
    
    95Gross margin
    
    
    91.9
    
    
    
    1,104.0
    
    
    
    421.5
    
    
    
    (92
    )
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    30.08
    
    
    $
    332.33
    
    
    $
    101.54
    
    
    
    (91
    )
    
    
    227Other miscellaneousand purchased productNet sales
    
    
    17.1
    
    
    
    44.9
    
    
    
    50.3
    
    
    
    (62
    )
    
    
    (11
    )Cost of goods sold
    
    
    5.2
    
    
    
    34.4
    
    
    
    39.0
    
    
    
    (85
    )
    
    
    (12
    )Gross margin
    
    
    11.9
    
    
    
    10.5
    
    
    
    11.3
    
    
    
    13
    
    
    
    (7
    )Gross Margin
    
    $
    103.8
    
    
    $
    1,114.5
    
    
    $
    432.8
    
    
    
    (91
    )
    
    
    158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    33.98
    
    
    $
    335.49
    
    
    $
    104.26
    
    
    
    (90
    )
    
    
    222
 Note 19 to the consolidated financial statements
provides information pertaining to our business
segments.1
    
    Rounding differences may occur
due to the use of whole dollars in per-tonne
calculations.
 Phosphate gross margin variance attributable to:
 2009 vs 2008Change in
    
    
    Change in Prices/CostsSales Volumes
    
    
    Net Sales
    
    
    Cost of Goods Sold
    
    
    TotalManufactured productFertilizerliquids
    
    $
    (51.9
    )
    
    $
    (415.5
    )
    
    $
    99.5
    
    
    $
    (367.9
    )Fertilizersolids
    
    
    61.8
    
    
    
    (747.0
    )
    
    
    164.5
    
    
    
    (520.7
    )Feed
    
    
    (38.8
    )
    
    
    (141.0
    )
    
    
    (1.6
    )
    
    
    (181.4
    )Industrial
    
    
    (52.7
    )
    
    
    19.1
    
    
    
    91.4
    
    
    
    57.8Change in product mix
    
    
    (41.3
    )
    
    
    41.3
    
    
    
    0.1
    
    
    
    0.1Total manufactured product
    
    $
    (122.9
    )
    
    $
    (1,243.1
    )
    
    $
    353.9
    
    
    
    (1,012.1
    )Miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4TOTAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,010.7
    )




---



##### 



29   PotashCorp 2009 Financial Review  PHOSPHATE PERFORMANCE: 2009 vs 2008 1
 1
    
    Direction of arrows refers to impact on gross margin
 Net Sales Prices
 6
    
    All major phosphate product prices, except industrial, decreased due to lower demand and
input costs throughout 2009.5
    
    Industrial prices increased as a result of certain contracts based
on prior year input costs, which were significantly higher in 2008.
 Sales Volumes
 5
    
    Fertilizer sales volumes fell markedly during the first three quarters
due to customer uncertainty about prices, planting decisions,
weather delays and a late-fall harvest. North American solid and
liquid fertilizer customers managed purchases and worked
through inventory levels, buying only as much as needed in an
effort to minimize risk. Solid and liquid fertilizer demand
rebounded in the fourth quarter of 2009 as North American and
offshore customers began to restock, supported by increased
farmer application rates and constructive commodity prices.6
    
    Demand for feed products declined in 2009 due to weak
economics in the beef, pork and poultry industries and increased use of substitute feed
supplements.6
    
    Industrial sales volumes fell in 2009 due to a slowdown in demand for purified phosphoric
acid used for food (e.g., soft drinks, vegetable oils, salad dressings) and other commercial
purposes (e.g., cleaning compounds, metal finishing, aluminum brightening).
 Cost of Goods Sold
 5
    
    Lower sulfur costs (61 percent) and lower ammonia costs
(19 percent) were partially offset by fixed costs being allocated over fewer tonnes (due to
reduced operating rates at both our White Springs FL and Aurora NC operations).6
    
    Feed had a negative cost variance due to a higher allocation of fixed costs (as a result of
liquid fertilizer production volumes falling significantly and feed being the highest volume
product at our White Springs plant, which was shuttered for a portion of 2009), partially
offset by a reversal of previously written-down finished product.
   (BAR CHART)
    
    (BAR CHART)
    
    (BAR CHART)




---



##### 



PHOSPHATE
  
  PotashCorp 2009 Financial Review   30 Phosphate Production
 Aurora
    
    White Springs
    
    GeismarAnnual
    
    Production
    
    Annual
    
    Production
    
    Annual
    
    ProductionCapacity
    
    2009
    
    2008
    
    2007
    
    Capacity
    
    2009
    
    2008
    
    2007
    
    Capacity
    
    2009
    
    2008
    
    2007Liquids:
MGA1
    
    
    1.835
    
    
    
    1.486
    
    
    
    1.739
    
    
    
    1.740
    
    
    
    1.908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.337
    
    
    
    0.233
    
    
    
    0.245
    
    
    
    0.258SPA
    
    
    0.676
    
    
    
    0.166
    
    
    
    0.191
    
    
    
    0.203
    
    
    
    1.138
    
    
    
    0.476
    
    
    
    0.704
    
    
    
    0.793
    
    
    
    0.196
    
    
    
    
    
    
    
    
    
    
    
    Solids (total)
    
    
    1.247
    
    DAP
    
    0.532
    
    
    
    0.445
    
    
    
    0.548
    
    
    
    0.454
    2
    DAP
    
    
    
    
    
    0.226
    
    
    
    0.375
    
    
    
    
    
    DAP
    
    
    
    
    
    
    
    
    
    MAP
    
    0.304
    
    
    
    0.395
    
    
    
    0.389
    
    
    
    
    
    MAP
    
    0.184
    
    
    
    0.208
    
    
    
    0.286
    
    
    
    
    
    MAP
    
    
    
    
    
    
    
    
    
    DAP/MAP (total)
    
    
    
    
    
    
    0.836
    
    
    
    0.840
    
    
    
    0.937
    
    
    
    
    
    
    
    0.184
    
    
    
    0.434
    
    
    
    0.661
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 1
    
    A substantial portion is consumed internally in the production of downstream
products. The balance is exported to phosphate fertilizer producers and sold domestically to
dealers who custom-mix liquid fertilizer.2
    
    Solids granulation capacity reduced due to permanently shutting down one granulation
train.
 Rock and Acid Production
 Phosphate Rock Production (million tonnes)
    

Phosphoric
Acid (million tonnes
P2O5)Annual
    
    Production
    
    Annual
    
    ProductionCapacity
    
    2009
    
    2008
    
    2007
    
    Capacity
    
    2009
    
    2008
    
    2007
    
    EmployeesAurora NC
    
    
    6.000
    
    
    
    4.198
    
    
    
    4.027
    
    
    
    4.086
    
    
    
    1.202
    
    
    
    0.932
    
    
    
    1.054
    
    
    
    1.083
    
    
    
    1,068White Springs FL
    
    
    3.600
    
    
    
    2.499
    
    
    
    3.025
    
    
    
    3.226
    
    
    
    0.966
    
    
    
    0.433
    
    
    
    0.741
    
    
    
    0.925
    
    
    
    706Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.202
    
    
    
    0.140
    
    
    
    0.147
    
    
    
    0.156
    
    
    
    73TOTAL
    
    
    9.600
    
    
    
    6.697
    
    
    
    7.052
    
    
    
    7.312
    
    
    
    2.370
    
    
    
    1.505
    
    
    
    1.942
    
    
    
    2.164
    
    
    
    1,847
 2008 vs 2007 1
 1
    
    Direction of arrows refers to impact on gross margin
 Net Sales Prices
 5
    
    Up in all major product categories in 2008 due to strong agricultural demand, a higher Chinese export tax (reducing its phosphate
fertilizer exports compared to 2007) and the impact of higher costs globally for inputs such as sulfur, phosphate rock and
ammonia.5
    
    Price increases in the industrial market trailed those of
other markets because certain contracts have pricing that resets annually.
 Sales Volumes
 6
    
    Demand declined significantly in the fourth quarter of 2008 as the global economic crisis
unfolded and buyers deferred purchases in anticipation of producers around the world reducing
prices to move product or acquire cash.6
    
    Poor weather slowed North American plantings and harvest, delaying purchase of fertilizers.
 Cost of Goods Sold
 6
    
    Higher sulfur costs as a result of increased demand.6
    
    Higher ammonia costs, impacting solid fertilizers, caused by increased agricultural
demand.6
    
    Increased rock costs due to mining further away from the mill at White Springs and higher
pre-stripping costs at Aurora.
 Purified
Acid Production 2 5
 Annual
    
    
    
    
    
    ProductionCapacity
    
    2009
    
    2008
    
    2007Aurora NC
    
    
    0.333
    
    
    
    0.173
    
    
    
    0.254
    
    
    
    0.268
  Phosphate Products for Food and Technical Applications
 Cincinnati OH
    
    2009
    
    2008
    
    2007Purified acid
feedstock utilized
(tonnes P2O5)
    
    
    10,107
    
    
    
    13,459
    
    
    
    13,465Product tonnes
processed:Acid
phosphates
    
    
    14,345
    
    
    
    18,308
    
    
    
    17,473Specialty
phosphates
    
    
    6,494
    
    
    
    9,425
    
    
    
    11,281
 Phosphate Feed Production
 Annual

    
    ProductionCapacity

    
    2009

    
    2008

    
    2007

    
    EmployeesMarseilles IL
    
    
    0.278
    
    
    
    0.137
    
    
    
    0.117
    
    
    
    0.132
    
    
    
    25White
Springs FL
(Monocal)1
    
    
    0.272
    
    
    
    
    
    
    
    0.153
    
    
    
    0.191
    
    
    
    0Weeping Water NE
    
    
    0.209
    
    
    
    0.079
    
    
    
    0.100
    
    
    
    0.110
    
    
    
    35Joplin MO
    
    
    0.163
    
    
    
    0.058
    
    
    
    0.065
    
    
    
    0.071
    
    
    
    23Aurora NC (DFP)
    
    
    0.159
    
    
    
    0.058
    
    
    
    0.095
    
    
    
    0.084
    
    
    
    30White
Springs FL (DFP)2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
        
    
    
    
    0Fosfatos do Brazil3
    
    
    
    
    
    
    
    
    
    
    0.043
    
    
    
    0.056
    
    
    
    0TOTAL
    
    
    1.081
    
    
    
    0.332
    
    
    
    0.573
    
    
    
    0.644
    
    
    
    113
 1
    
    Ceased production January 1, 20092
    
    Production ceased July 31, 2005 and permanently curtailed in 20093
    
    Divested ownership September 29, 2008




---



##### 



Nitrogen
 L to R   Stephen Dowdle   Wayne Brownlee   Karen Chasez




---



##### 



Nitrogen SWOT
 STRENGTHS
 
    
    Long-term, lower-cost natural gas contracts
in Trinidad
    
    60 percent of our ammonia production in Trinidad,
close to the US, the worlds largest importer
    
    Geographic location of US-manufactured ammonia operations
relatively insulated from competitive US Gulf imports
    
    More than three-quarters of ammonia sales from US plants made to less cyclical industrial
customers
 WEAKNESSES
 
    
    40 percent of our ammonia production is in the US,
affected by variability of natural gas prices there
    
    Contractual commitments to US industrial
customers may force us to temporarily operate
unprofitably amid rising gas prices
  OPPORTUNITIES
 
    
    Ukraine and Western Europe suppliers have
higher gas costs, supporting a higher floor for
US nitrogen prices
    
    LNG projects in low-cost gas regions provide
alternatives for monetizing gas, reducing new
supply pressures in nitrogen
    
    Higher construction costs and geopolitical
risk in many low-cost gas regions discourage
greenfield plants
 THREATS
 
    
    Low-cost natural gas in developing countries may
be monetized, particularly by governments, as
nitrogen products
    
    Significant government ownership and influence
worldwide could lead to political rather than
market-driven decisions
    
    Shorter construction period means new capacity
can impact the market more quickly than for
other nutrients
    
    Changes in transport regulations in North America
could substantially increase the cost of shipping
ammonia and difficulty in getting permits for
terminals
   fact the world needs fertilizer




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##### 



31   PotashCorp 2009 Financial Review
  
  NITROGEN OVERVIEW
 The Nitrogen Business: The Simple Things That Matter
 Low-Cost Natural Gas Is Vital
   Many Countries Produce, Making Market Proximity Key
  end-user
 Government Involvement Is Major Factor
  Volatility Is Common in Nitrogen Markets
 high-cost
 PotashCorp in Nitrogen:
 The Simple Fact Is Trinidad Gives Us an Edge
 Trinidad Benefits From Lower-Cost, Long-Term Gas Contracts
  SNAPSHOT OF NITROGENStrategies
    
    Risks
    
    Mitigation
    
    Capability to DeliverMaximize,
leverage benefits
of lower-cost
Trinidad production
    
    Governments with
surplus low-cost
natural gas may
monetize it by
converting it to
nitrogen without
considering demand
    
    Maintain Trinidads
cost advantage
through gas
contracts
    
    Multi-year,
lower-cost gas
contracts provide
long-term advantage
Long-term vessel
leases secure
delivery to US
marketsDirect sales of US
production to
less-cyclical
industrial
customers
    
    Competition from
low-cost imports
through the US Gulf
    
    Focus on customers
that rely on
long-term, secure
supply
    
    Industrial customers
 some linked by
pipeline  take more
than 75% of our US
manufactured ammonia




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##### 



NITROGEN
  
  PotashCorp 2009 Financial Review   32  We Emphasize Industrial Production in the US
  Nitrogen Sales and Logistics
    (IMAGE)
Tom
Hunt takes readings for a work permit 
at our PCS Nitrogen facility in
Lima OH(BAR GRAPH)
    
    (LINE CHART)




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##### 



33   PotashCorp 2009 Financial Review  POTASHCORPS STRATEGY
 Maximize Margins and Minimize Volatility Through Trinidad Gas Contracts and US Industrial Sales
    CAPABILITY TO DELIVER
 Delivering Products Efficiently
   RISK TO OUR NITROGEN STRATEGY
 Cyclicality
  (BAR GRAPH)
    
    (BAR GRAPH)




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##### 



NITROGEN
  
  PotashCorp 2009
Financial Review   34 Nitrogen Results
 % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    (Decrease)
    
    
    Tonnes (thousands)
    
    
    (Decrease)
    
    
    Average per Tonne1
    
    
    (Decrease)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Sales
    
    $
    1,286.5
    
    
    $
    2,497.7
    
    
    $
    1,799.9
    
    
    
    (48
    )
    
    
    39Freight
    
    
    49.1
    
    
    
    56.5
    
    
    
    55.6
    
    
    
    (13
    )
    
    
    2Transportation
and distribution
    
    
    54.9
    
    
    
    50.9
    
    
    
    51.6
    
    
    
    8
    
    
    
    (1
    )Net sales
    
    $
    1,182.5
    
    
    $
    2,390.3
    
    
    $
    1,692.7
    
    
    
    (51
    )
    
    
    41Manufactured productNet SalesAmmonia
    
    $
    425.3
    
    
    $
    999.5
    
    
    $
    664.3
    
    
    
    (57
    )
    
    
    50
    
    
    
    1,740
    
    
    
    1,794
    
    
    
    2,132
    
    
    
    (3
    )
    
    
    (16
    )
    
    $
    244.43
    
    
    $
    557.05
    
    
    $
    311.55
    
    
    
    (56
    )
    
    
    79Urea
    
    
    416.6
    
    
    
    633.1
    
    
    
    468.6
    
    
    
    (34
    )
    
    
    35
    
    
    
    1,433
    
    
    
    1,186
    
    
    
    1,333
    
    
    
    21
    
    
    
    (11
    )
    
    $
    290.64
    
    
    $
    533.77
    
    
    $
    351.63
    
    
    
    (46
    )
    
    
    52Nitrogen solutions,
nitric acid,
ammonium nitrate
    
    
    284.3
    
    
    
    577.9
    
    
    
    437.8
    
    
    
    (51
    )
    
    
    32
    
    
    
    1,794
    
    
    
    2,062
    
    
    
    2,266
    
    
    
    (13
    )
    
    
    (9
    )
    
    $
    158.50
    
    
    $
    280.34
    
    
    $
    193.21
    
    
    
    (43
    )
    
    
    451,126.2
    
    
    
    2,210.5
    
    
    
    1,570.7
    
    
    
    (49
    )
    
    
    41
    
    
    
    4,967
    
    
    
    5,042
    
    
    
    5,731
    
    
    
    (1
    )
    
    
    (12
    )
    
    $
    226.73
    
    
    $
    438.43
    
    
    $
    274.07
    
    
    
    (48
    )
    
    
    60Cost of goods sold
    
    
    947.8
    
    
    
    1,485.1
    
    
    
    1,055.6
    
    
    
    (36
    )
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    190.81
    
    
    $
    294.56
    
    
    $
    184.19
    
    
    
    (35
    )
    
    
    60Gross margin
    
    
    178.4
    
    
    
    725.4
    
    
    
    515.1
    
    
    
    (75
    )
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    35.92
    
    
    $
    143.87
    
    
    $
    89.88
    
    
    
    (75
    )
    
    
    60Other miscellaneous
and purchased productNet sales
    
    
    56.3
    
    
    
    179.8
    
    
    
    122.0
    
    
    
    (69
    )
    
    
    47Cost of goods sold
    
    
    42.9
    
    
    
    167.8
    
    
    
    101.0
    
    
    
    (74
    )
    
    
    66Gross margin
    
    
    13.4
    
    
    
    12.0
    
    
    
    21.0
    
    
    
    12
    
    
    
    (43
    )Gross Margin
    
    $
    191.8
    
    
    $
    737.4
    
    
    $
    536.1
    
    
    
    (74
    )
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    38.61
    
    
    $
    146.25
    
    
    $
    93.54
    
    
    
    (74
    )
    
    
    56
 Note 19 to the consolidated financial statements
provides information pertaining to our business
segments.1
    
    Rounding differences may occur
due to the use of whole dollars in per-tonne
calculations.
 Sales Tonnes (thousands)
    
    Average Net Sales Price per Tonne2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2007Fertilizer
    
    
    2,084
    
    
    
    1,794
    
    
    
    2,054
    
    
    $
    236.25
    
    
    $
    451.19
    
    
    $
    302.23Feed
    
    
    31
    
    
    
    35
    
    
    
    28
    
    
    $
    395.61
    
    
    $
    638.26
    
    
    $
    399.59Industrial
    
    
    2,852
    
    
    
    3,213
    
    
    
    3,649
    
    
    $
    217.95
    
    
    $
    429.14
    
    
    $
    257.604,967
    
    
    
    5,042
    
    
    
    5,731
    
    
    $
    226.73
    
    
    $
    438.43
    
    
    $
    274.07
 Nitrogen gross margin variance attributable to:
 2009 vs 2008Change in
    
    Change in Prices/CostsSales Volumes
    
    Net Sales
    
    Cost of Goods Sold
    
    TotalManufactured productAmmonia
    
    $
    (12.6
    )
    
    $
    (543.9
    )
    
    $
    337.5
    
    
    $
    (219.0
    )Urea
    
    
    73.1
    
    
    
    (348.5
    )
    
    
    158.5
    
    
    
    (116.9
    )Solutions, nitric acid, ammonium nitrate
    
    
    (30.6
    )
    
    
    (218.6
    )
    
    
    135.3
    
    
    
    (113.9
    )Hedge
    
    
    
    
    
    
    
    
    
    
    (97.1
    )
    
    
    (97.1
    )Change in product mix
    
    
    (59.5
    )
    
    
    59.5
    
    
    
    (0.1
    )
    
    
    (0.1
    )Total manufactured product
    
    $
    (29.6
    )
    
    $
    (1,051.5
    )
    
    $
    534.1
    
    
    
    (547.0
    )Other miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4TOTAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (545.6
    )




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##### 



35   PotashCorp 2009 Financial Review  NITROGEN PERFORMANCE: 2009 vs 2008 1
 1
    
    Direction of arrows refers to impact on gross margin
 Net Sales Prices
 6
    
    Sharp decrease consistent with declining crop commodity prices, lower energy costs and weak
industrial and agricultural demand that resulted from cautious customer buying behavior during
the global economic crisis.
 Sales Volumes
 5
    
    Fertilizer sales tonnes increased in 2009 due to more Trinidad
production available this year.6
    
    Non-fertilizer sales tonnes decreased largely as a result of weakened industrial demand
associated with the global economic crisis.5
    
    Urea up due to higher shipments to offshore markets.6
    
    Ammonia sales were down due to soft industrial demand, the redirection of Trinidad
production to higher-margin urea and decreased demand from North American customers for direct
application and solid phosphate fertilizers.6
    
    Nitrogen solutions sales volumes down 5 percent in 2009 due to weak customer demand caused
by late spring and compressed fall application seasons. We also curtailed production due to
poor market conditions.6
    
    Nitric acid and ammonium nitrate sales volumes decreased 23 percent and 11 percent,
respectively, due to reduced industrial demand in the US as some customers facilities
operated at substantially lower rates due to the effects of the weak economy on consumer goods
and durables and commercial explosives businesses.
 Cost of Goods Sold
 5
    
    Lower mainly due to the decrease in average natural gas costs
in production, including hedge. Natural gas costs in Trinidad
production decreased 62 percent while our US spot costs for
natural gas in production decreased 55 percent.6
    
    Losses from our US natural gas hedging activities compared to gains in 2008.5
    
    Lower natural gas costs offset somewhat by higher turnaround
costs in 2009 that were not incurred in 2008, and additional
costs associated with a fire at one of our Trinidad plants in
March 2009.
  (LINE GRAPH)
    
    (BAR GRAPH)
    

(BAR GRAPH)




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##### 



NITROGEN
  
  PotashCorp 2009 Financial Review   36 2008 vs 2007 1
 1
    
    Direction of arrows refers to impact on gross margin
 Net Sales Prices
 5
    
    Record prices driven by strong agricultural demand for most of
2008, rising Chinese export taxes, higher energy costs and
ammonia supply disruptions for major non-US producers.6
    
    Market prices for nitrogen products fell sharply in the fourth
quarter of 2008. The international ammonia market weakened
considerably as large-scale cutbacks were made to operating
rates in the phosphate and industrial sectors, leading to sizable
curtailments in ammonia export supply, including a portion of
our Trinidad operations.
 Sales Volumes
 6
    
    Demand declined in the fourth quarter of 2008. Some US farmers forwent normal fall
fertilizer application due, in part, to a late harvest and expectations that nitrogen prices
would fall against a backdrop of declining raw material prices and growing inventories in
uncertain economic conditions.6
    
    Less Trinidad product was available than in 2007 due to
turnarounds during the year.
 Cost of Goods Sold
 6
    
    Our average natural gas cost in production was higher than 2007, and inefficiencies arising from lower production rates
compared to 2007 were also experienced.6
    
    Our natural gas costs in Trinidad are linked to the ammonia
sales price, causing total average cost in production to increase.5
    
    US natural gas costs in production were slightly lower.6
    
    The price variance in cost of goods sold for ammonia was higher than other products as
natural gas is a larger component of ammonia than downstream products.
 
 Nitrogen Production
 Annual
    
    ProductionCapacity
    
    2009
    
    2008
    
    2007Ammonia1Trinidad
    
    
    2.177
    
    
    
    1.858
    
    
    
    1.785
    
    
    
    2.077Augusta GA
    
    
    0.713
    
    
    
    0.690
    
    
    
    0.674
    
    
    
    0.610Lima OH
    
    
    0.588
    
    
    
    0.555
    
    
    
    0.538
    
    
    
    0.531TOTAL
    
    
    3.478
    
    
    
    3.103
    
    
    
    2.997
    
    
    
    3.218Urea SolidsTrinidad
    
    
    0.709
    
    
    
    0.674
    
    
    
    0.633
    
    
    
    0.710Augusta GA
    
    
    0.471
    
    
    
    0.382
    
    
    
    0.358
    
    
    
    0.312Lima OH
    
    
    0.353
    
    
    
    0.353
    
    
    
    0.314
    
    
    
    0.292Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    
    1.533
    
    
    
    1.409
    
    
    
    1.305
    
    
    
    1.314Nitrogen Solutions2Trinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.581
    
    
    
    0.254
    
    
    
    0.317
    
    
    
    0.239Lima OH
    
    
    0.227
    
    
    
    0.105
    
    
    
    0.078
    
    
    
    0.082Geismar LA
    
    
    1.028
    
    
    
    0.291
    
    
    
    0.477
    
    
    
    0.520TOTAL
    
    
    1.836
    
    
    
    0.650
    
    
    
    0.872
    
    
    
    0.841Nitric Acid1,3Trinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.604
    
    
    
    0.503
    
    
    
    0.592
    
    
    
    0.525Lima OH
    
    
    0.117
    
    
    
    0.080
    
    
    
    0.097
    
    
    
    0.100Geismar LA
    
    
    0.844
    
    
    
    0.440
    
    
    
    0.599
    
    
    
    0.699TOTAL
    
    
    1.565
    
    
    
    1.023
    
    
    
    1.288
    
    
    
    1.324Ammonium Nitrate SolidsTrinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.576
    
    
    
    0.511
    
    
    
    0.576
    
    
    
    0.540Lima OH
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    
    0.576
    
    
    
    0.511
    
    
    
    0.576
    
    
    
    0.540EmployeesTrinidad
    
    
    417Augusta GA
    
    
    124Lima OH
    
    
    129Geismar LA
    
    
    63TOTAL
    
    
    733
    4
 1
    
    A substantial portion is upgraded to value-added products.2
    
    Based on 32% N content.3
    
    As 100% HN03 tonnes.4
    
    403 contract employees work at the nitrogen plants, for a total workforce of 1,136.




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##### 



37   PotashCorp 2009 Financial Review
  
  2010OUTLOOK The Simple Fact: Science Dictates a Rebound
 We believe 2009 was an aberration in fertilizer history.
 The timing of buyer engagement and extent of rebuild will determine 2010 rebound.
 1 Economy
   2 Agriculture
    3 Potash
  (BAR GRAPH)
    

(LINE CHART)
    
    (BAR GRAPH)




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##### 



2010 OUTLOOK
  
  PotashCorp 2009 Financial Review   38 (BAR GRAPH)
    
    (BAR GRAPH)
    
    (BAR GRAPH)
   4 Phosphate
   5 Nitrogen




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##### 



39   PotashCorp 2009 Financial Review
  
  KEY PERFORMANCE DRIVERS 1
    
    Be the supplier of choice to the markets we serve
 Why we measure customer perceptions
Our customers expect high-quality products, support and information. We believe that measuring
their opinions allows us to address concerns, improve our performance and be the preferred
supplier.
 2009 Target
 l
    
    Achieved
We outperformed competitors in both quality and overall customer service in all four product groups
surveyed.
 2010 Target
 1
    
    Outperform competitors on quality and service as measured by
independent customer surveys.
 GOALS, TARGETS AND RESULTS
 To advance our goals and drive the desired results, we set corporate-level targets each year  key
performance indicators (KPI). In the spirit of growth and continuing improvement, these indicators
of performance are regularly measured and monitored throughout the organization, providing timely
feedback about the progress made toward achieving our goals.
 
 L to R
Denis Sirois     Jim Dietz     Denita Stann




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##### 



KEY PERFORMANCE DRIVERS
  
  PotashCorp 2009
Financial Review   40 2  Maximize long-term shareholder value
 Why we measure total shareholder returnTotal shareholder return (TSR) is the amount investors receive in capital gains and dividends.
Measuring our performance against our peers illustrates our ability to execute strategies that
maximize shareholder value.
 2009 Target   1
 ¡
    
    Did Not Achieve
Our total shareholder return of 48.7 percent was below the 76.5 percent return of our
sector and the 60.9 percent of the DAXglobal Agribusiness Index.Why we measure cash flow return on investment
We strive to maximize the benefit of every dollar we invest in our business for our shareholders.
By comparing PotashCorp to our peer group, we can demonstrate the long-term value we create
through our investment decisions.
 2009 Target   1
 ¡
    
    Did Not Achieve
Cash flow return on investment (CFR) was below that of our sector.Why we measure governance rankings
Good governance is important in managing risk and building stakeholder trust. We believe measuring
our governance practices against our peers lets us track our success in earning shareholder
support, which ultimately enhances our long-term value.
 2009 Target
 l
    
    Achieved
We ranked in the top quartile in all predetermined external reviews.
 Tracking Our Performance
 
  2010 Targets
 1
    
    Exceed total shareholder return performance for our sector1 and
the DAXglobal Agribusiness Index.2
    
    Exceed cash flow return on investment for our
sector1.3
    
    Remain in the top quartile of governance practices as measured by predetermined
external reviews.
 
 1
    
    Sector: Weighted average (based on market capitalization) for Agrium, APC, CF
Industries, ICL, Intrepid, K+S, Mosaic, SQM, Terra, Uralkali and Yara for most recent four fiscal
quarters available.




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##### 



41   PotashCorp 2009 Financial Review 3
    
    Build strong relationships with and improve the socioeconomic well-being of our communities
 Why we measure donations
 We strive to create long-term socioeconomic value and stability in the communities where we
operate. Donations enable our communities to share
in our financial success. We encourage our employees to donate to causes important to them through
the matching gift program. In this way, they help direct our donations to many excellent charities
and organizations.
 2009 Target
 l
    
    Achieved
Employee participation and total matching gift donations exceeded
2008 levels.
 2009 Target
 £
    
    Partially Achieved
Our annual philanthropic donations were 0.6 percent of the rolling
five-year average of after-tax earnings.Why we measure community perceptions
By engaging with communities and contributing to the quality of life, we
create mutually beneficial relationships and cultivate ongoing support for our operations. We
measure our success through annual perception surveys in communities where we operate.
 2009 Target
 l
    
    Achieved
We scored 4 or above on all community surveys.Why we measure local spending
Our operations create jobs, taxes and other local benefits. PotashCorps commitment to monitoring
and achieving local spending targets is important to the ongoing economic success of our
communities.
 2009 Target
 l
    
    Achieved
Local spending was 62 percent, excluding purchases for major expansions, energy, transportation
and raw materials.
 Tracking Our Performance
 
  2010 Targets
 1
    
    Achieve a 10 percent increase in employee participation in the matching gift program and a 10
percent increase in matching gift donations from 2009 levels.2
    
    Invest up to 1 percent of after-tax earnings (on a five-year rolling average) in communities
and other philanthropic programs.3
    
    Achieve 4 (performing well) out of 5 on community leaders surveys.




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##### 



KEY PERFORMANCE DRIVERS
  
  PotashCorp 2009
Financial Review   42 4
    
    Attract and retain talented, motivated and productive
employees who are committed
to our long-term goals
 Why we measure internal promotion
We believe that internal promotion provides opportunities for developing our employees and
broadening their knowledge base, which in turn improves retention, motivation and productivity.
 2009 Target
 l
    
    Achieved
We filled 89 percent of senior staff openings with internal candidates.Why we measure employee engagement
We believe that measuring employee engagement helps assess motivation
and alignment with the companys goals. It also enables us to address areas of concern with our
employees.
 2009 Target
 l
    
    Achieved
The average employee engagement score was 76 percent.Why we measure time to fill job openings
We are focused on building a committed workforce able to support PotashCorps continued growth. We
believe that the ability to attract and secure top candidates in a timely manner demonstrates that
we are viewed as a preferred employer.
 2009 Target
 ¡
    
    Did Not Achieve
The average time required to fill staff-level job postings was 34 days.
 Tracking Our Performance
 
  2010 Targets
 1
    
    Fill at least 75 percent of senior staff openings with
internal candidates.2
    
    Achieve an average employee engagement score of at least 75 percent on the annual survey.3
    
    Achieve an acceptance rate of 85 percent on all external staff-level employment offers made.




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##### 



43   PotashCorp 2009 Financial Review 5
    
    Achieve no harm to people and no damage to the environment
 Why we measure severity of injuries
Our long-term success and emphasis on safety are directly tied to our employees and especially
those who operate our facilities. We collect and analyze data so we can develop actions to reduce
or eliminate at-risk behaviors and hazards, thus leading to reduced workplace injuries.2009 Target
Reduce total site* severity injury rate** by 25 percent from 2008 levels by the end of 2011.l
    
    Achieved
We met our three-year target in 2009, achieving a 25 percent reduction from 2008 levels.2009 Target
Achieve zero life-altering injuries at our sites*.¡
    
    Did Not Achieve
There was a fatality at one of our potash facilities in 2009.Why we measure emissions and compliance
By focusing on important measures such as releases, spills and permit excursions, we can analyze
our performance in order to reduce our risks and our environmental footprint.2009 Target
Reduce company-wide greenhouse gas emissions per tonne of product by 10 percent by the end of 2012,
compared to 2007.l
    
    Achieved
On schedule. We are evaluating greenhouse gas monitors at two of our nitrogen facilities, and
have plans in place to meet our 2012 target.2009 Target
Reduce total reportable releases, permit excursions and spills by 15 percent from 2008 levels.¡
    
    Did Not Achieve
Total reportable releases and permit excursions were 16 percent higher than in 2008.
 Tracking Our Performance
 
  2010 Targets
 1
    
    Reduce total site* severity injury rate** by 35 percent from 2008 levels by the end of 2012.2
    
    Achieve zero life-altering injuries at our sites*.3
    
    Reduce company-wide greenhouse gas emissions per tonne of product by 10 percent by the end of
2012, compared to 2007.4
    
    Reduce total reportable releases, permit excursions and spills by 30 percent from our
2009 levels.
 
 *
    
    Total site includes PotashCorp employees, contract employees and all others on site.**
    
    Severity injury rate is the total of lost-time injuries and modified work injuries for every
200,000 hours worked.




---



##### 



REWARDING RESULTS
  
  PotashCorp 2009
Financial Review   44 Our Philosophy, Reward Structure and Oversight
  
    
    Attracts, motivates and retains world-class talent;
    
    Meaningfully links substantial portions of executive compensation to performance that drives
long-term shareholder value;
    
    Aligns executive interests with shareholders through stock ownership requirements; and
    
    Does not promote a higher corporate risk profile.
      Compensation
    
    
    
    
    
    PerformanceElement
    
    Form
    
    Eligibility
    
    Period
    
    DeterminationBase salary
    
    Cash
    
    All salaried employees
    
    Annual
    
        For executive officers, targets are set to the median of comparable companies,
adjusted to reflect individual responsibility and performance.Short-term 
incentives
    
    Cash
    
    All executives, most
salaried staff and
hourly union and
non-union employees
    
    1 year
    
        Based on achieving predetermined goals for corporate performance or a
combination of corporate and operating group performance.
    Can be adjusted (± 30%) to recognize individual performance.Medium-term 
incentives
    
    Performance
share units
    
    All executives and
senior management
(71 people)
    
    3 years
    
        Units issued at our 30-day average share price on award date.
    Units vest and are paid out at the end of the three-year performance period,
calculated whereby half the units vest based on total shareholder return (TSR)1
and half based on our TSR relative to the TSR of a selected peer group2.
    Payout value is equal to the number of vested units multiplied by our 30-day
average share price at the end of the performance period (subject to a maximum
of three times the initial unit price).Long-term 
incentives
    
    Performance
options
    
    All executives, senior
management and
other selected
management
(267 people)
    
    3 years
(vesting) 
10 years
(option term)
    
        Performance options incorporate a performance-based vesting schedule
measuring the three-year average excess of cash flow return over our weighted
average cost of capital.
    Vested option value is based on our share price appreciation within the option term.
    Awarded once per year, following shareholder approval of the plan and with an
exercise price no lower than the closing market price on the day before the
options are granted.See Performance Options below.
 
 1
    
    TSR is the total shareholder return on an investment in PotashCorp stock from the
time the investment is made. TSR has two components: (1) growth in share price and (2) related
dividend income on the shares.2
    
    January 1, 2009  December 31, 2011: DAXglobal Agribusiness Index Performance Options: Aligning Executive Compensation, Shareholder Interests




---



##### 



45   PotashCorp 2009 Financial Review
  
  RISK MANAGEMENT  We Manage Risks to Our Fertilizer Enterprise
  Global Risk Environment
 
    Risk Methodology and Ranking Matrix
  A Extreme:
 B Major:
 C Acceptable:
 D Low:
 E Negligible:
   PotashCorp Risk Management Ranking Methodology
 Risk Ranking Matrix
    
    
    SEVERITY OF CONSEQUENCE1
    
    
    2
    
    
    3
    
    
    4
    
    
    5Negligible
    
    
    Low
    
    
    Acceptable
    
    
    Major
    
    
    ExtremeLIKELIHOOD OR FREQUENCY
    
    
    
    5
    
    
    
    Probable(0-6 months)
    
    
    C
    
    
    B
    
    
    B
    
    
    A
    
    
    A4
    
    
    
    High(6 months-2 years)
    
    
    D
    
    
    C
    
    
    B
    
    
    B
    
    
    A3
    
    
    
    Medium(2-10 years)
    
    
    D
    
    
    D
    
    
    C
    
    
    B
    
    
    B2
    
    
    
    Low(10-50 years)
    
    
    E
    
    
    D
    
    
    D
    
    
    C
    
    
    B1
    
    
    
    Remote(> 50 years)
    
    
    E
    
    
    E
    
    
    D
    
    
    D
    
    
    C




---



##### 



RISK MANAGEMENT
  
  PotashCorp 2009
Financial Review   46 Risk Governance
  Board of Directors:
 
    
    Oversees risk management process primarily through its committees:
 -
    
    The audit committee monitors the company risk management process quarterly, primarily
focusing on financial and regulatory compliance risk.-
    
    The safety, health and environment committee and corporate governance and nominating
committee primarily focus on risks in their areas of oversight.-
    
    The compensation committee focuses on risks in its area of oversight, including assessment
of compensation programs to ensure they do not incentivize increased corporate risk (See
Rewarding Results, Page 44).
 Risk Management Committee:
 
    
    Comprised of senior management, this committee ensures overall risk profile is consistent
with our corporate strategy and business goals.
 
    
    Establishes the risk management process to identify, measure, manage and disclose risks.
 
    
    Maintains our company-wide risk management framework, and regularly reviews our risk
management policy and regulatory requirements.
 
    
    Reports quarterly to the CEO and the audit committee on all significant risks, including new
or increased risks resulting from changes in operations or external factors.
 
    
    Reports to the Board of Directors at an annual session on risk management.
 Internal Audit:
 
    
    Provides independent and objective assurance and consulting services to evaluate and report
to management and the audit committee on the effectiveness of governance, risk management and control processes.
 Internal Control Compliance Team:
 
    
    Ensures identification and management of risks related to internal controls over financial
reporting by reviewing and testing such controls.
 Business Segments:
 
    
    Identify and manage risks within their areas of responsibility.
 Key Risks by Operating Segments
 Risks specific to our operating segments are discussed at length in their respective sections
within this report, and listed briefly below:
 Segment
    
    Risk
    
    PagePotash
    
    Excess supply
    
    
    21Insufficient demand
    
    
    21Inadequate transportation and
distribution infrastructure
    
    
    21Underground mine hazards
    
    
    21Phosphate
    
    Cyclicality
    
    
    27Nitrogen
    
    Cyclicality
    
    
    33




---



##### 



47   PotashCorp 2009 Financial Review
  
  2009 FINANCIAL OVERVIEW 2009 Financial Overview
 This section provides an overview of our financial performance based on our consolidated financial
statements on Pages 82 to 133. We report our results of operations in three business segments:
potash, phosphate and nitrogen. These segments are differentiated by the chemical nutrient
contained in the product that each produces. Our reporting structure reflects how we manage our
business and how we classify our operations for planning and measuring performance.We include net sales in our segment disclosures in the consolidated financial statements pursuant
to Canadian generally accepted accounting principles (Canadian GAAP), which require segmentation
based upon our internal organization and reporting of revenue and profit measures derived from
internal accounting methods. As a component of gross margin, net sales (and the related per-tonne
amounts) are primary revenue measures we use and review in making decisions about operating matters
on a business segment basis. These decisions include assessments about performance and the
resources to be allocated to these segments. We also use net sales (and the related per-tonne
amounts) for business planning and monthly forecasting. Net sales are calculated as sales revenues
less freight, transportation and distribution expenses. The following financial overview evaluates
the company on a non-segment basis, except for fourth-quarter analysis. Detailed financial analyses
of our three business segments are set out on Page 22 for potash, Page 28 for phosphate and Page 34
for nitrogen.All references to per-share amounts pertain to diluted net income per share (EPS). Certain of the
prior years figures have been reclassified to conform with the current years presentation.
 Dollars (millions), except per-share amounts
    
    
    % Increase (Decrease)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Sales
    
    $
    3,976.7
    
    
    $
    9,446.5
    
    
    $
    5,234.2
    
    
    
    (58
    )
    
    
    80Gross Margin
    
    
    1,026.0
    
    
    
    4,907.4
    
    
    
    1,881.2
    
    
    
    (79
    )
    
    
    161Operating Income
    
    
    1,192.2
    
    
    
    4,635.1
    
    
    
    1,588.5
    
    
    
    (74
    )
    
    
    192Net Income
    
    
    987.8
    
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    (72
    )
    
    
    217Net Income per Share  Diluted
    
    
    3.25
    
    
    
    11.01
    
    
    
    3.40
    
    
    
    (70
    )
    
    
    224




---



##### 



2009 FINANCIAL OVERVIEW
  
  PotashCorp 2009
Financial Review   48 2009 Earnings Compared to Guidance
  Cause
    
    Effect on EPSPotash offshore realized prices
    
    $
    (1.31
    )Potash North American realized prices
    
    
    (0.86
    )Potash offshore sales volumes
    
    
    (4.60
    )Potash North American sales volumes
    
    
    (2.93
    )Decreased potash royalties
    
    
    0.24Decreased potash costs due to foreign exchange
    
    
    0.10Decreased brine inflow costs
    
    
    0.06Increased other potash costs
    
    
    (0.30
    )Decreased provincial mining taxes
    
    
    2.14Subtotal potash
    
    
    (7.46
    )Phosphate realized prices
    
    
    (0.70
    )Phosphate sales volumes
    
    
    (0.23
    )Increased sulfur input costs
    
    
    (0.02
    )Decreased ammonia input costs
    
    
    0.02Increased other phosphate costs
    
    
    (0.06
    )Subtotal phosphate
    
    
    (0.99
    )Nitrogen realized prices
    
    
    0.01Manufactured nitrogen sales volumes
    
    
    (0.11
    )Decreased cost of natural gas
    
    
    0.08Increased other nitrogen costs (exclusive of cost of natural gas)
    
    
    (0.03
    )Subtotal nitrogen
    
    
    (0.05
    )Decrease in other income
    
    
    (0.28
    )Decrease in selling and administrative
    
    
    0.04Increase in interest expense
    
    
    (0.10
    )Foreign exchange variance
    
    
    0.62Subtotal other
    
    
    0.28Subtotal of the above
    
    
    (8.22
    )Reduction in weighted average number of shares outstanding
    
    
    0.03Lower income tax rate on ordinary income
    
    
    0.28Discrete items impacting income taxes
    
    
    0.16Total variance from 2009 diluted EPS guidance
    
    $
    (7.75
    )
 2009 Earnings Compared to 2008
  Cause
    
    Effect on EPSPotash offshore realized prices
    
    $
    (0.38
    )Potash North American realized prices
    
    
    0.06Potash offshore sales volumes
    
    
    (3.45
    )Potash North American sales volumes
    
    
    (1.71
    )Decreased potash royalties
    
    
    0.10Decreased potash costs due to foreign exchange
    
    
    0.12Decreased brine inflow costs
    
    
    0.06Increased other potash costs
    
    
    (0.29
    )Decreased provincial mining taxes
    
    
    1.22Subtotal potash
    
    
    (4.27
    )Phosphate realized prices
    
    
    (2.94
    )Phosphate sales volumes
    
    
    (0.29
    )Decreased sulfur input costs
    
    
    0.86Decreased ammonia input costs
    
    
    0.07Increased other phosphate costs
    
    
    (0.09
    )Subtotal phosphate
    
    
    (2.39
    )Nitrogen realized prices
    
    
    (2.48
    )Manufactured nitrogen sales volumes
    
    
    (0.07
    )Decreased cost of natural gas
    
    
    0.94Decreased other nitrogen costs (exclusive of cost of natural gas)
    
    
    0.32Subtotal nitrogen
    
    
    (1.29
    )Increase in other income
    
    
    0.02Decrease in selling and administrative
    
    
    0.01Increase in interest expense
    
    
    (0.14
    )Foreign exchange variance
    
    
    (0.21
    )Subtotal other
    
    
    (0.32
    )Subtotal of the above
    
    
    (8.27
    )Reduction in weighted average number of shares outstanding
    
    
    0.13Lower income tax rate on ordinary income
    
    
    0.14Discrete items impacting income taxes
    
    
    0.24Total variance from 2008 diluted EPS
    
    $
    (7.76
    )




---



##### 



49   PotashCorp 2009 Financial Review
  
  EXPENSES & OTHER INCOME  Dollars (millions)
    
    
    % Increase (Decrease)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Selling and administrative
    
    $
    183.6
    
    
    $
    188.4
    
    
    $
    212.6
    
    
    
    (3
    )
    
    
    (11
    )Provincial mining and other taxes
    
    
    29.0
    
    
    
    543.4
    
    
    
    135.4
    
    
    
    (95
    )
    
    
    301Foreign exchange (gain) loss
    
    
    (35.4
    )
    
    
    (126.0
    )
    
    
    70.2
    
    
    
    (72
    )
    
    
    n/mOther income
    
    
    343.4
    
    
    
    333.5
    
    
    
    125.5
    
    
    
    3
    
    
    
    166Interest expense
    
    
    120.9
    
    
    
    62.8
    
    
    
    68.7
    
    
    
    93
    
    
    
    (9
    )Income taxes
    
    
    83.5
    
    
    
    1,077.1
    
    
    
    416.2
    
    
    
    (92
    )
    
    
    159Other comprehensive income (loss)
    
    
    990.9
    
    
    
    (1,521.0
    )
    
    
    1,309.9
    
    
    
    n/m
    
    
    
    n/m
  2009 vs 2008
 Selling and administrative
 Provincial mining and other taxes
 Foreign exchange gains
 Other income
 interest expense
  %2009
    
    
    2008
    
    
    Change
    
    
    ChangeLong-term debt obligations,
including current portionWeighted average outstanding
    
    $
    3,002.2
    
    
    $
    1,387.8
    
    
    $
    1,614.4
    
    
    
    116Weighted average interest rate
    
    
    4.6
    %
    
    
    6.5
    %
    
    
    (1.9
    )%
    
    
    (29
    )Short-term debt obligationsWeighted average outstanding
    
    $
    603.5
    
    
    $
    798.5
    
    
    $
    (195.0
    )
    
    
    (24
    )Weighted average interest rate
    
    
    1.6
    %
    
    
    2.4
    %
    
    
    (0.8
    )%
    
    
    (33
    )
  Income taxes
 
    
    In 2009, a future income tax recovery of $119.2 million for a tax rate reduction resulting
from an internal restructuring
    
    A current income tax recovery of $47.6 million in 2009 that related to an increase in
permanent deductions in the US from prior years. In 2008, income tax recoveries of $71.1
million (of which $29.1 million was current and $42.0 million was future) that related to an
increase in permanent deductions in the US from prior years
    
    In 2009, a future income tax expense of $24.4 million related to a functional currency
election by the parent company for Canadian income tax purposes




---



##### 



EXPENSES & OTHER INCOME
  
  PotashCorp 2009
Financial Review   50 
    
    A current income tax expense of $8.6 million related to currency fluctuations on the repayment
of intercompany debt in 2009
    
    Future income tax assets were written down by $11.0 million during 2008
    
    The $25.3 million gain that was recognized in 2008 as a result of the change in fair value of
the forward purchase contract for shares in Sinofert was not taxable.
  Other comprehensive income
 2008 vs 2007
 Selling and administrative
 Provincial mining and other taxes
 Foreign exchange gains
 Other
income
 The interest expense
  %2008
    
    
    2007
    
    
    Change
    
    
    ChangeLong-term debt obligations,
including current portionWeighted average outstanding
    
    $
    1,387.8
    
    
    $
    1,557.3
    
    
    $
    (169.5
    )
    
    
    (11
    )Weighted average interest rate
    
    
    6.5
    %
    
    
    6.6
    %
    
    
    (0.1
    )%
    
    
    (2
    )Short-term debt obligationsWeighted average outstanding
    
    $
    798.5
    
    
    $
    95.7
    
    
    $
    702.8
    
    
    
    734Weighted average interest rate
    
    
    2.4
    %
    
    
    5.4
    %
    
    
    (3.0
    )%
    
    
    (56
    )
 Income taxes
 
    
    In 2008, income tax recoveries of $71.1 million (of which $29.1 million was current and $42.0
million was future) were recorded that related to an increase in permanent deductions in the
US from prior years
    
    Future income tax assets were written down by $11.0 million during 2008
    
    The $25.3 million gain that was recognized in 2008 as a result of the change in fair value of
the forward purchase contract for shares in Sinofert was not taxable




---



##### 



51   PotashCorp 2009 Financial Review
  
  EXPENSES & OTHER INCOME 
    
    During the fourth quarter of 2007, the Government of Canada enacted a reduction of the federal
corporate income tax rate from 21 percent in 2007 to 15 percent by 2012. In addition, a small
change was enacted in the second quarter of 2007. The federal corporate income tax changes reduced
the companys future income tax liability by $40.1 million in 2007.
   Impact of Foreign Exchange
    Impact on net income
 2009
    
    
    2008Foreign exchange impact on operating costs
before income taxes 1
    
    $
    42.1
    
    
    $
    (28.1
    )Foreign exchange impact on conversion of
balance sheet and treasury activities before
income taxes
    
    
    (35.4
    )
    
    
    (126.0
    )Net income increase (decrease) before income
taxes
    
    
    6.7
    
    
    
    (154.1
    )Diluted net income per share increase
(decrease) after income taxes
    
    
    0.02
    
    
    
    (0.49
    )
 1
    
    Assumes the 2009 exchange rate had remained at the 2008 year-end rate of 1.2246
(compared to 1.0466 at December 31, 2009), and the 2008 exchange rate remained at the 2007
year-end rate of 0.9881.




---



##### 



QUARTERLY RESULTS
  
  PotashCorp 2009
Financial Review   52 Quarterly
Results and Review of Fourth-Quarter Performance
 2009
    
    
    2008Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    Total
    
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    TotalSales
    
    $
    922.5
    
    
    $
    856.0
    
    
    $
    1,099.1
    
    
    $
    1,099.1
    
    
    $
    3,976.7
    
    
    $
    1,890.6
    
    
    $
    2,621.0
    
    
    $
    3,064.3
    
    
    $
    1,870.6
    
    
    $
    9,446.5Less: Freight
    
    
    37.6
    
    
    
    38.9
    
    
    
    53.7
    
    
    
    60.8
    
    
    
    191.0
    
    
    
    102.4
    
    
    
    103.4
    
    
    
    81.4
    
    
    
    37.7
    
    
    
    324.9Transportation and distribution
    
    
    27.0
    
    
    
    37.7
    
    
    
    36.3
    
    
    
    27.1
    
    
    
    128.1
    
    
    
    32.3
    
    
    
    33.3
    
    
    
    31.6
    
    
    
    35.2
    
    
    
    132.4Cost of goods sold
    
    
    628.3
    
    
    
    608.8
    
    
    
    662.9
    
    
    
    731.6
    
    
    
    2,631.6
    
    
    
    899.9
    
    
    
    1,047.0
    
    
    
    1,210.3
    
    
    
    924.6
    
    
    
    4,081.8Gross margin
    
    
    229.6
    
    
    
    170.6
    
    
    
    346.2
    
    
    
    279.6
    
    
    
    1,026.0
    
    
    
    856.0
    
    
    
    1,437.3
    
    
    
    1,741.0
    
    
    
    873.1
    
    
    
    4,907.4Operating income
    
    
    218.4
    
    
    
    285.8
    
    
    
    358.4
    
    
    
    329.6
    
    
    
    1,192.2
    
    
    
    749.0
    
    
    
    1,296.0
    
    
    
    1,714.7
    
    
    
    875.4
    
    
    
    4,635.1Net income
    
    
    308.3
    
    
    
    187.1
    
    
    
    248.8
    
    
    
    243.6
    
    
    
    987.8
    
    
    
    566.0
    
    
    
    905.1
    
    
    
    1,236.1
    
    
    
    788.0
    
    
    
    3,495.2Other comprehensive income (loss)
    
    
    37.0
    
    
    
    404.5
    
    
    
    123.9
    
    
    
    425.5
    
    
    
    990.9
    
    
    
    189.0
    
    
    
    970.0
    
    
    
    (1,638.1
    )
    
    
    (1,041.9
    )
    
    
    (1,521.0
    )Net income per share  basic
    
    
    1.04
    
    
    
    0.63
    
    
    
    0.84
    
    
    
    0.82
    
    
    
    3.34
    
    
    
    1.79
    
    
    
    2.91
    
    
    
    4.07
    
    
    
    2.63
    
    
    
    11.37Net income per share  diluted
    
    
    1.02
    
    
    
    0.62
    
    
    
    0.82
    
    
    
    0.80
    
    
    
    3.25
    
    
    
    1.74
    
    
    
    2.82
    
    
    
    3.93
    
    
    
    2.56
    
    
    
    11.01
   
   
    
    Although demand in potash markets began to show signs of improvement during the quarter,
buyers were resistant to commit to inventory restocking and prices moved lower. Fourth-quarter
sales represented more than one-third of our 2009 total of 3.0 million tonnes. We shipped 0.5
million tonnes to North American customers, a 30 percent increase over the same period last
year, and 0.6 million tonnes to offshore markets, which was 42 percent
below fourth-quarter 2008 levels. Canpotex sold 36 percent of its volumes to India, 21 percent to
Southeast Asia and 9 percent to Brazil; the remaining volumes were sold to other regions. Average
realized prices recalibrated over the course of the year, resulting in a decline from the fourth
quarter of 2008. Realized prices continued to be impacted by fixed transportation and distribution
costs spread over fewer sales tonnes. Total potash cost of goods sold was $40 per tonne higher due
to overhead costs being allocated over fewer production tonnes and a stronger Canadian dollar that
increased costs. In 2008, cost of goods sold was impacted by strike and other labor costs that
mainly resulted from work stoppages. A total of 36 mine shutdown weeks were taken in the quarter
as a result of production curtailments to match reduced demand (24 mine shutdown weeks in
fourth-quarter 2008, primarily as a result of strikes at our Allan, Cory and Patience Lake
facilities).
    
    Phosphate fourth-quarter sales volumes to North American and offshore markets approached
historical levels, due to strong crop economics, low producer inventories and limited
perceived pricing risk. Higher input costs and strong demand pushed prices higher through the
quarter. While prices for all product categories were significantly lower in 2009s fourth
quarter, our industrial segment continued to benefit from sales tied to cost-plus or market
index provisions that lag current market conditions. Industrial and feed products contributed
nearly all of phosphate gross margin for the quarter, reinforcing the value of our product
diversification strategy. Quarterly sales volumes were higher than those in the slow fourth
quarter of 2008, primarily due to improved demand for liquid and solid fertilizers. Costs of
goods sold decreased mainly due to lower costs of sulfur and ammonia.




---



##### 



53   PotashCorp 2009 Financial Review
  
  QUARTERLY RESULTS 
    
    Improved demand for agricultural and industrial nitrogen products resulted in US nitrogen sales
volumes increasing compared to the same period last year. Prices remained well below those of the
previous year, but increased compared to the trailing quarter, driven by higher input costs and
strong demand. Our total average cost of natural gas used in production, including our hedge, was
$4.55 per MMBtu compared to $6.16 per MMBtu last year, resulting in a decrease in cost of goods
sold. Trinidad natural gas production cost is primarily indexed to Tampa ammonia prices and was 33
percent lower. US spot natural gas production costs fell 35 percent although the impact on cost of
goods sold was partially offset by losses from US natural gas hedging activities.
    
    Selling and administrative expenses were higher in fourth-quarter 2009. Accruals associated with
our medium-term incentive plan (which is measured and paid on a three-year performance cycle) were
higher in 2009 due to increases in our share price against the targets, compared to 2008 when our
share price declined substantially during the fourth quarter against the targets, resulting in
prior accruals being reversed in that period. The value of our deferred share units also increased
in 2009 (price of our common shares increased) whereas they declined in 2008. The increases were
partially offset by lower accruals for our short-term incentive plan as a result of our financial
performance being below budget and a decrease in the value of our stock option grants.
    
    Provincial mining and other taxes declined due primarily to a decrease in Saskatchewan Potash
Production Tax, which was attributable to potash profit per tonne declining substantially from the prior year.
    
    Foreign exchange gains resulted primarily from the impact of making excess income tax
instalment payments for the year, as described in the expenses and other income section on
Page 49. As a result of the functional currency election, our other exposure to changes in the
foreign exchange rate was substantially limited compared to 2008. A foreign exchange gain
resulted in 2008 when the Canadian dollar weakened against the US dollar
and impacted the translation of Canadian dollar-denominated monetary items, offset in part by
foreign exchange derivative losses.
    
    Interest expense almost doubled due to a significant increase in long-term debt, offset in
part by higher capitalized interest.
    
    The effective tax rate was 16 percent (2008  8 percent). Included in this rate in
fourth-quarter 2009 was an expense of $8.6 million related to currency fluctuations on the
repayment of intercompany debt, and a cumulative adjustment for a reduction in the tax rate
during the fourth quarter. A cumulative adjustment for a reduction in the tax rate was also
included in this rate in the fourth quarter of 2008.
    
    Other comprehensive income was negative in the fourth quarter of 2008 due primarily to
significant declines in the value of our investments and natural gas hedging derivatives
caused by the global economic crisis.
 Three Months Ended December 31Tonnes (thousands)
    
    
    Average Net Sales Price per MT% Increase
    
    
    
    
    
    
    
    
    
    
    % Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    2009
    
    
    2008
    
    
    (Decrease)PotashManufactured ProductNorth America
    
    
    494
    
    
    
    379
    
    
    
    30
    
    
    $
    395.54
    
    
    $
    740.48
    
    
    
    (47
    )Offshore
    
    
    612
    
    
    
    1,058
    
    
    
    (42
    )
    
    $
    287.63
    
    
    $
    583.27
    
    
    
    (51
    )Manufactured Product
    
    
    1,106
    
    
    
    1,437
    
    
    
    (23
    )
    
    $
    335.83
    
    
    $
    624.70
    
    
    
    (46
    )PhosphateManufactured ProductFertilizer  Liquid phosphates
    
    
    263
    
    
    
    173
    
    
    
    52
    
    
    $
    302.22
    
    
    $
    1,016.58
    
    
    
    (70
    )Fertilizer  Solid phosphates
    
    
    305
    
    
    
    80
    
    
    
    281
    
    
    $
    300.95
    
    
    $
    1,041.79
    
    
    
    (71
    )Feed
    
    
    135
    
    
    
    102
    
    
    
    32
    
    
    $
    434.50
    
    
    $
    948.20
    
    
    
    (54
    )Industrial
    
    
    151
    
    
    
    157
    
    
    
    (4
    )
    
    $
    659.90
    
    
    $
    744.85
    
    
    
    (11
    )Manufactured Product
    
    
    854
    
    
    
    512
    
    
    
    67
    
    
    $
    386.23
    
    
    $
    923.51
    
    
    
    (58
    )NitrogenManufactured ProductAmmonia
    
    
    354
    
    
    
    395
    
    
    
    (10
    )
    
    $
    300.27
    
    
    $
    447.13
    
    
    
    (33
    )Urea
    
    
    341
    
    
    
    279
    
    
    
    22
    
    
    $
    297.25
    
    
    $
    374.54
    
    
    
    (21
    )Nitrogen solutions, Nitric acid, Ammonium nitrate
    
    
    437
    
    
    
    381
    
    
    
    15
    
    
    $
    152.00
    
    
    $
    283.95
    
    
    
    (46
    )Manufactured Product
    
    
    1,132
    
    
    
    1,055
    
    
    
    7
    
    
    $
    242.14
    
    
    $
    368.95
    
    
    
    (34
    )




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##### 



KEY
EARNINGS SENSITIVITIES  |  FINANCIAL CONDITION REVIEW
  
  PotashCorp 2009
Financial Review   54 
 KEY EARNINGS SENSITIVITIES
 A number of factors affect the earnings of the companys three nutrient segments. The table
below shows the key factors and their approximate effect on EPS based on the assumptions
used in the 2010 earnings guidance of $4.00 to $5.00 per share.
 EffectInput Cost Sensitivities
    
    
    
    on EPSNYMEX gas price increases
by $1/MMBtu
    
    Nitrogen
    
    + 0.06Potash
    
    - 0.02Sulfur changes by $20/long ton
    
    Phosphate
    
    ± 0.12Canadian to US dollar
strengthens by $0.01
    
    Canadian operating expenses
net of provincial taxes
    
    - 0.02Translation gain/loss
    
    - 0.00
 EffectPrice and Volume Sensitivities
    
    on EPSPrice
    
    Potash changes by $20/tonne
    
    ± 0.33DAP/MAP changes by $20/tonne
    
    ± 0.06Ammonia increases by $20/tonne Nitrogen
    
    + 0.03 Phosphate
    
    - 0.02Urea changes by $20/tonne
    
    ± 0.06Volume
    
    Potash changes by 100,000 tonnes
    
    ± 0.05Nitrogen changes by 50,000 N tonnes
    
    ± 0.03Phosphate changes by 50,000
P2O5 tonnes
    
    ± 0.02
 
 FINANCIAL CONDITION REVIEW




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##### 



55   PotashCorp 2009 Financial Review
  
  FINANCIAL CONDITION REVIEW




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##### 



LIQUIDITY & CAPITAL RESOURCES
  
  PotashCorp 2009
Financial Review   56 LIQUIDITY & CAPITAL RESOURCES
   Cash Requirements
  Contractual Obligations and Other CommitmentsDollars (millions)
 December 31, 2009Payments Due by PeriodTotal
    
    
    Within 1 year
    
    
    1 to 3 years
    
    
    3 to 5 years
    
    
    Over 5 yearsLong-term debt obligations
    
    $
    3,358.0
    
    
    $
    1.8
    
    
    $
    606.2
    
    
    $
    750.0
    
    
    $
    2,000.0Estimated interest payments
on long-term debt obligations
    
    
    1,719.1
    
    
    
    194.4
    
    
    
    318.4
    
    
    
    259.1
    
    
    
    947.2Operating leases
    
    
    589.3
    
    
    
    81.8
    
    
    
    150.8
    
    
    
    139.3
    
    
    
    217.4Purchase commitments
    
    
    911.0
    
    
    
    344.5
    
    
    
    260.9
    
    
    
    116.0
    
    
    
    189.6Capital commitments
    
    
    197.8
    
    
    
    163.0
    
    
    
    34.8
    
    
    
    
    
    
    
    Other commitments
    
    
    121.9
    
    
    
    42.0
    
    
    
    51.6
    
    
    
    13.0
    
    
    
    15.3Other long-term liabilities
    
    
    1,445.8
    
    
    
    86.9
    
    
    
    118.3
    
    
    
    101.4
    
    
    
    1,139.2Total
    
    $
    8,342.9
    
    
    $
    914.4
    
    
    $
    1,541.0
    
    
    $
    1,378.8
    
    
    $
    4,508.7
 Long-Term Debt
    Operating Leases
  Purchase Commitments




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##### 



57   PotashCorp 2009 Financial Review
  
  LIQUIDITY & CAPITAL RESOURCES   Capital Commitments
  Other Commitments
  Other Long-Term Liabilities
   Capital Expenditures
  Sources and Uses of Cash
   % Increase (Decrease)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Cash provided by operating activities
    
    $
    923.9
    
    
    $
    3,013.2
    
    
    $
    1,688.9
    
    
    
    (69
    )
    
    
    78Cash used in investing activities
    
    
    (1,669.2
    )
    
    
    (1,647.3
    )
    
    
    (758.1
    )
    
    
    1
    
    
    
    117Cash provided by (used in) financing activities
    
    
    853.9
    
    
    
    (1,808.6
    )
    
    
    (537.0
    )
    
    
    n/m
    
    
    
    237Increase (decrease) in cash and cash equivalents
    
    $
    108.6
    
    
    $
    (442.7
    )
    
    $
    393.8
    
    
    
    n/m
    
    
    
    (212
    )
   December 31
    
    
    December 31
    
    
    December 31
    
    

% Increase (Decrease)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Current assets
    
    $
    2,271.7
    
    
    $
    2,267.2
    
    
    $
    1,811.3
    
    
    
    
    
    
    
    25Current liabilities
    
    
    (1,559.9
    )
    
    
    (2,615.8
    )
    
    
    (1,001.9
    )
    
    
    (40
    )
    
    
    161Working capital
    
    
    711.8
    
    
    
    (348.6
    )
    
    
    809.4
    
    
    
    n/m
    
    
    
    n/mCurrent ratio
    
    
    1.46
    
    
    
    0.87
    
    
    
    1.81
    
    
    
    68
    
    
    
    (52
    )




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##### 



CAPITAL STRUCTURE & MANAGEMENT
  
  PotashCorp 2009
Financial Review   58     CAPITAL STRUCTURE & MANAGEMENT
Capital Structure
 December 31
    
    
    December 312009
    
    
    2008Cash and cash equivalents
    
    $
    385.4
    
    
    $
    276.8Short-term debt obligations
    
    
    727.0
    
    
    
    1,324.8Current portion of long-term debt
    
    
    1.8
    
    
    
    0.2Long-term debt obligations
    
    
    3,356.2
    
    
    
    1,758.0Deferred debt costs and swap gains
    
    
    (36.9
    )
    
    
    (19.4
    )Total debt
    
    
    4,048.1
    
    
    
    3,063.6Shareholders equity
    
    $
    6,500.7
    
    
    $
    4,588.9Total debt to capital
    
    
    38
    %
    
    
    40
    %Fixed-rate debt obligations as a percentage of total debt obligations
    
    
    82
    %
    
    
    44
    %Common shares outstanding
    
    
    295,975,550
    
    
    
    295,200,987Stock options outstanding
    
    
    12,709,425
    
    
    
    12,849,356Dividend payout ratio1
    
    
    12
    %
    
    
    4
    %
 1
 Principal
Debt Instruments
 Total
    
    
    Amount Outstanding
    
    
    AmountAmount
    
    
    and Committed
    
    
    AvailableCredit facilities1
    
    $
    3,250.0
    
    
    $
    724.9
    
    
    $
    2,525.1Line of credit
    
    
    75.0
    
    
    
    32.9
    2
    
    
    42.1
 
 1
    
    The amount available under the $750.0 million commercial paper program is
limited to the availability of backup funds under the credit facilities. Included in the
amount outstanding and committed is $724.9 million of commercial paper. Per the terms of the
agreements, the commercial paper outstanding and committed, as applicable, is based on the
US dollar balance or equivalent thereof in lawful money of other currencies at the time of
issue; therefore, subsequent changes in the exchange rate applicable to Canadian
dollar-denominated commercial paper have no impact on this balance.2
    
    Letters of credit committed.




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##### 



59   PotashCorp 2009 Financial Review
  

CAPITAL STRUCTURE & MANAGEMENT       Outstanding Share Data
    Off-Balance Sheet Arrangements
  Contingencies
  Guarantee Contracts




---



##### 



MARKET RISKS  |  RELATED PARTY TRANSACTIONS
  
  PotashCorp 2009 Financial Review   60 Derivative Instruments
  Leases and Long-Term Contracts
  MARKET RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS
  
 RELATED PARTY TRANSACTIONS
   
 CRITICAL ACCOUNTING ESTIMATES
    Variable Interest Entities




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##### 



61   PotashCorp 2009 Financial Review
  
  CRITICAL ACCOUNTING ESTIMATES Financial Instruments, Derivatives and Hedging
        Pension and Other Post-Retirement Costs




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##### 



CRITICAL ACCOUNTING ESTIMATES
  
  PotashCorp 2009 Financial Review   62   Impact of a 0.5% Change in Key Assumptions
  Pension Plans
    
    
    Other PlansObligation
    
    
    Expense
    
    
    Obligation
    
    
    ExpenseDiscount rateDecrease in assumption
    
    $
    52.2
    
    
    $
    4.8
    
    
    $
    21.8
    
    
    $
    2.3Increase in assumption
    
    
    (45.4
    )
    
    
    (4.0
    )
    
    
    (19.8
    )
    
    
    (2.2
    )Expected long-term rate of returnDecrease in assumption
    
    
    n/a
    
    
    
    3.3
    
    
    
    n/a
    
    
    
    n/aIncrease in assumption
    
    
    n/a
    
    
    
    (2.7
    )
    
    
    n/a
    
    
    
    n/aRate of compensation increaseDecrease in assumption
    
    
    (9.5
    )
    
    
    (1.9
    )
    
    
    
    
    
    
    Increase in assumption
    
    
    10.3
    
    
    
    2.0
    
    
    
    
    
    
    
    Medical trend rateDecrease in assumption
    
    
    n/a
    
    
    
    n/a
    
    
    
    (17.6
    )
    
    
    (3.6
    )Increase in assumption
    
    
    n/a
    
    
    
    n/a
    
    
    
    20.7
    
    
    
    4.5
 
 n/a =
    
    not applicable Asset Retirement Obligations and
Other Environmental Costs
    Impact of a Change in Key Assumptions
   Discount Rate
    
    
    Inflation Rate+0.5%
    
    
    -0.5%
    
    
    +0.5%
    
    
    -0.5%Potash ARO
    
    $
    (3.8
    )
    
    $
    6.0
    
    
    $
    7.9
    
    
    $
    (4.5
    )Phosphate ARO
    
    
    (9.6
    )
    
    
    11.9
    
    
    
    12.5
    
    
    
    (10.1
    )Nitrogen ARO
    
    
    (0.4
    )
    
    
    0.5
    
    
    
    0.5
    
    
    
    (0.4
    )




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##### 



63   PotashCorp 2009 Financial Review
  
  CRITICAL ACCOUNTING ESTIMATES Income Taxes
   Asset Impairment
     Contingencies




---



##### 



CRITICAL ACCOUNTING ESTIMATES
  
  PotashCorp 2009 Financial
Review   64 Stock-Based Compensation
   Restructuring Charges
  Capitalization, Depreciation and Amortization




---



##### 



65   PotashCorp 2009 Financial Review
  
  RECENT ACCOUNTING CHANGES RECENT
ACCOUNTING CHANGES
AND EFFECTIVE DATES




---



##### 



RECENT ACCOUNTING CHANGES
  
  PotashCorp 2009 Financial
Review   66  Key Activities
    
    Milestones
    
    StatusAccounting policies and procedures:    Identify differences between IFRSs and
the companys existing policies and
procedures
    Analyze and select ongoing policies where
alternatives are permitted
    Analyze and determine which IFRS 1
exemptions will be taken on transition to
IFRSs
    Implement revisions to accounting and
procedures manuals
    
        Senior management
approval and audit
committee review of
policy decisions by
Q1 2010
    Revised
accounting policy
and procedures
manuals in place by
changeover date
    
        Accounting policy
alternatives have
been analyzed and
recommendations
made for the
majority of key
accounting policy
decisions. These
accounting policy
decisions were
preliminarily
approved by senior
management and
reviewed by the
audit committee of
the Board of
Directors in Q1
2010
    Revisions to
accounting and
procedures manuals
are being drafted
as work on each
area of IFRSs
progressesFinancial statement preparation:    Prepare financial statements and note
disclosures in compliance with IFRSs
    Quantify the effects of converting to
IFRSs
    Prepare first-time adoption
reconciliations required under IFRS 1
    
        Senior management
approval and audit
committee review of
pro forma financial
statements and
disclosures by Q1
2010
    
        Development of
financial statement
format is in
progress
    Draft note
disclosures have
been prepared for
most areas of IFRSs
    The effects of
the conversion are
being quantified as
work on each area
of IFRSs progressesTraining and communication:    Provide topic-specific training to key
employees involved with implementation
    Develop awareness of the likely impacts
of the transition throughout the company
    Provide company-specific training on
revised policies and procedures to affected
personnel
    Provide timely communication of the
impacts of converting to IFRSs to our
external stakeholders
    
        Topic-specific
training for IFRSs
work stream members
provided as work on
each IFRSs topic
commences
    Company-specific
detailed training
implemented prior
to changeover date
    Impacts of
converting to IFRSs
communicated prior
to changeover
    
        Key employees
involved with
implementation have
completed
topic-specific
training
    Regular awareness
presentations are
provided at various
forums to prepare
personnel for the
changeover
    A detailed
training plan has
been developed and
approved. Training
will be conducted
using a
three-tiered
approach with more
detailed training
provided for
practitioners and
higher-level
training provided
for other personnel
    Communication to
external
stakeholders has
been ongoing
through our MD&A
disclosures, with
further detail
being provided as
key accounting
policy and
implementation
decisions have been
made. Further
refinement of
expected impacts of
the IFRSs
conversion will
occur in each
period up to
adoption of IFRSsBusiness impacts:    Identify impacts of conversion on
contracts including financial covenants and
compensation arrangements
    Identify impacts of conversion on taxation
    
        Impacts on
contracts
identified by Q4
2009
    Taxation impacts
identified by Q1
2010
    
        Identification of
impacts on
contracts is
complete. Adoption
of IFRSs is not
expected to have
any material impact
on the companys
contracts
    A specific
company resource
with experience in
taxation and IFRSs
has been dedicated
to the taxation
work streamIT systems:    Identify changes required to IT systems
and implement solutions
    Determine and implement solution for
capturing financial information under
Canadian GAAP, US GAAP and IFRSs during the
year of transition to IFRSs (for
comparative information)
    
        Necessary changes
to IT systems
implemented by
changeover date
    Solution for
capturing financial
information under
multiple sets of
accounting
principles
implemented by 2009
    
        Required changes
to IT systems and
data collection
mechanisms are
being identified as
each work stream
progresses
    IFRSs
record-keeping has
been implemented
within the
companys financial
information system
to enable the
capturing of
financial
information under
multiple sets of
accounting
principlesControl environment:    For all changes to policies and
procedures identified, assess effectiveness
of internal controls over financial
reporting (ICFR) and disclosure controls
and procedures (DC&P) and implement any
necessary changes
    Design and implement internal controls
over the IFRSs changeover process
    
        Sign-off by
internal controls
group on
effectiveness of
internal controls
by Q1 2010
    Internal controls
over IFRSs
changeover process
in place by 2009
    
        Relevant internal
controls are being
assessed and signed
off on as each work
stream progresses
    Specific controls
have been
established and
documented in
relation to the
IFRSs changeover
process




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##### 



67   PotashCorp 2009 Financial Review
  
  RECENT ACCOUNTING CHANGES   First-Time Adoption of IFRSs
  Area of IFRSs
    
    Summary of Exemption AvailableBusiness Combinations
    
    Choices: The company may elect, on transition
to IFRSs, to either restate all past business
combinations in accordance with IFRS 3
Business Combinations or to apply an elective
exemption from applying IFRS 3 to past business
combinationsPolicy selection:If the elective exemption is
chosen, specific requirements must be met, such
as: maintaining the classification of the
acquirer and the acquiree, recognizing or
derecognizing certain acquired assets or
liabilities as required under IFRSs and
remeasuring certain assets and liabilities at
fair value. The company will elect, on
transition to IFRSs, to apply the elective
exemption such that transactions entered into
prior to the transition date will not be
restatedExpected transition impact:NoneExpected future impact:NoneProperty, Plant and
Equipment
    
    Choices:The company may elect to report items
of property, plant and equipment, in its
opening balance sheet on the transition date at
a deemed cost instead of the actual cost that
would be determined under IFRSs. The deemed
cost of an item may be either its fair value at
the date of transition to IFRSs or an amount
determined by a previous revaluation under
Canadian GAAP (as long as that amount was close
to either its fair value, cost or adjusted
cost). The exemption can be applied on an
asset-by-asset basisPolicy selection:The company will not elect to
report any items of property, plant and
equipment in its opening balance sheet on the
transition date, at a deemed cost instead of
the actual cost that would be determined under
IFRSs. The company will instead report the
items at costExpected transition impact:NoneExpected future impact:NoneShare-Based Payments
    
    Choices:The company may elect not to apply
IFRS 2, Share-Based Payments, to equity
instruments granted on or before November 7,
2002 or which vested before the companys date
of transition to IFRSs. The company may also
elect not to apply IFRS 2 to liabilities
arising from share-based payment transactions
which settled before the date of transition to
IFRSsPolicy selection:The company will elect not to
apply IFRS 2 to equity instruments granted on
or before November 7, 2002 or which vested
before the companys date of transition to
IFRSs. The company will also elect not to apply
IFRS 2 to liabilities arising from share-based
payment transactions which settled before the
date of transition to IFRSsExpected transition impact:Not significantExpected future impact:Not significant




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##### 



RECENT ACCOUNTING CHANGES
  
  PotashCorp 2009 Financial
Review   68  Area of IFRSs
    
    Summary of Exemption AvailableEmployee Benefits
    
    Choices:The company may elect to recognize all cumulative actuarial gains and
losses through opening retained earnings at the date of transition to IFRSs.
Actuarial gains and losses would have to be recalculated under IFRSs from the
inception of each of our defined benefit plans if the exemption is not taken. The
companys choice must be applied to all defined benefit plans consistentlyPolicy selection:As the company intends to adopt an ongoing policy of recognizing
all actuarial gains and losses immediately in other comprehensive income, all
cumulative actuarial gains and losses at the date of transition to IFRSs will be
recognized at the date of transition to IFRSs, regardless of whether this exemption
is taken. Therefore, the company does not intend to specifically make use of this
exemptionExpected transition impact:See Expected Areas of Significance on the following pageExpected future impact:See Expected Areas of Significance on the following pageForeign Exchange
    
    Choices:On transition, cumulative translation gains or losses in accumulated other
comprehensive income can be reclassified to retained earnings at the companys
election. If not elected, all cumulative translation differences must be
recalculated under IFRSs from inceptionPolicy selection:The company has recalculated the cumulative foreign exchange
translation gains or losses in other comprehensive income under IFRSs
retrospectivelyExpected transition impact:NoneExpected future impact:NoneDecommissioning Liabilities
    
    Choices:In accounting for changes in obligations to dismantle, remove and restore
items of property, plant and equipment, the guidance in IFRSs requires changes in
such obligations to be added to or deducted from the cost of the asset to which it
relates. The adjusted depreciable amount of the asset is then depreciated
prospectively over its remaining useful life. Rather than recalculating the effect
of all such changes throughout the life of the obligation, the company may elect to
measure the liability and the related depreciation effects at the date of
transition to IFRSsPolicy selection:The company intends to elect to measure any decommissioning
liabilities and the related depreciation effects at the date of transition to IFRSsExpected transition impact:Not yet quantifiedExpected future impact:Not yet quantified




---



##### 



69   PotashCorp 2009 Financial Review
  
  RECENT ACCOUNTING CHANGES Expected Areas of Significance
  AccountingPolicy Area
    
    Impact of Policy AdoptionImpairment
of Assets
    
    Choices:There are no policy choices available under IFRSsDifferences from existing
Canadian GAAP:Canadian GAAP generally uses a two-step approach to
impairment testing: first comparing asset carrying values with undiscounted future cash
flows to determine whether impairment exists; and then measuring any impairment by comparing
asset carrying values with fair values. International Accounting Standard (IAS) 36,
Impairment of Assets, uses a one-step approach for both testing for and measurement of
impairment, with asset carrying values compared directly with the higher of fair value less
costs to sell and value in use (which uses discounted future cash flows). This may
potentially result in more writedowns where carrying values of assets were previously
supported under Canadian GAAP on an undiscounted cash flow basis, but could not be supported
on a discounted cash flow basis.We have determined that the reporting level to analyze whether an impairment exists may be
higher for IFRSs than the level required by Canadian GAAP. As a result, fewer impairments may
result under IFRSs as losses from a specific plant, that may have been impaired under
Canadian standards, may now be grouped with other profitable plants (together representing a
cash-generating unit).In addition, the extent of any new writedowns may be partially offset by the requirement
under IAS 36 to reverse any previous impairment losses where circumstances have changed such
that the impairments have been reduced. Canadian GAAP prohibits reversal of impairment lossesExpected transition impact:The company has identified certain assets for which impairment
losses have been previously recognized, but which are no longer impaired. The previously
recognized impairment loss will need to be reversed on transition to IFRSs, which will
result in an increase in the carrying amount of property, plant and equipment in 2009 of $9
million (2008  $10 million, 2007  $11 million). Net income for 2009 would decrease by $1
million (2008  $1 million)Expected future impact:Dependent upon future circumstances, as described aboveEmployee Benefits
    
    Choices:Actuarial gains and losses are permitted under IAS 19, Employee Benefits, to be
recognized directly in other comprehensive income rather than through profit or lossPolicy selection:Actuarial gains and losses will be recognized in other comprehensive incomeDifferences from existing Canadian GAAP:IAS 19 requires the past service cost element of
defined benefit plans to be expensed on an accelerated basis, with vested past service costs
expensed immediately and unvested past service costs recognized on a straight-line basis
until the benefits become vested. Under Canadian GAAP, past service costs are generally
amortized on a straight-line basis over the average remaining service period of active
employees expected under the plan.Under Canadian GAAP, certain gains and losses which were unrecognized at the time of adopting
the current Canadian accounting standard were permitted to be amortized over a period under
transitional provisions of the current standard. Under IFRSs, those amounts will not be
permitted to remain unrecognized and must be recognized on transition to IFRSsExpected transition impact:Equity will be reduced by $353 million (2008  $375 million,
2007  $120 million). Net income for 2009 would increase by $46 million (2008  $2 million)Expected future impact:The effect of actuarial gains and losses will no longer affect net
income under the companys accounting policy choice; however, shareholders equity is
expected to be subject to greater variability as the effects of actuarial gains and losses
will be recognized immediately, rather than being deferred and amortized over a period of
timeShare-Based
Payments
    
    Choices:There are no policy choices available under IFRSsDifferences from existing Canadian GAAP:IFRS 2, Share-Based Payments, requires that
cash-settled share-based payments to employees be measured (both initially and at each
reporting date) based on fair values of the awards. Canadian GAAP requires that such
payments be measured based on intrinsic values of the awards. This difference is expected to
impact the accounting measurement of some of our cash-settled employee incentive plans, such
as our performance unit incentive planExpected transition impact:Not significantExpected future impact:Any future significant difference between the fair value and
intrinsic value of outstanding units under the companys performance unit incentive plan
will result in different measurements under IFRSs and Canadian GAAP




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##### 



RECENT ACCOUNTING CHANGES
  
  PotashCorp 2009 Financial
Review   70  AccountingPolicy Area
    
    Impact of Policy AdoptionProvisions
(including Asset 
Retirement Obligations)
    
    Choices:There are no policy choices available under IFRSsDifferences from existing Canadian GAAP:IAS 37, Provisions, Contingent Liabilities and Contingent
Assets, requires a provision to be recognized when: there is a present obligation as a result of a past
transaction or event; it is probable that an outflow of resources will be required to settle the
obligation; and a reliable estimate can be made of the obligation. Probable in this context means more
likely than not. Under Canadian GAAP, the criterion for recognition in the financial statements is
likely, which is a higher threshold than probable. Therefore, it is possible that there may be some
contingent liabilities not recognized under Canadian GAAP which would require a provision under IFRSs.Other differences between IFRSs and Canadian GAAP exist in relation to the measurement of provisions,
such as the methodology for determining the best estimate where there is a range of equally possible
outcomes (IFRSs uses the mid-point of the range, whereas Canadian GAAP uses the low end), and the
requirement under IFRSs for provisions to be discounted where material.In relation to Asset Retirement Obligations, measurement under IFRSs will be based on managements best
estimate, while measurement under Canadian GAAP is based on the fair value of the obligation (which takes
market assumptions into account). Cash flow estimates are discounted to present value under IFRSs using
a discount rate which is based on the risks specific to the liability, unless those risks have been
built into the cash flow estimates. Canadian GAAP requires the use of a credit adjusted risk free rate to
discount cash flow estimatesExpected transition impact:Not yet quantifiedExpected future impact:Provisions may be recognized more frequently under IFRSs than under Canadian GAAPIncome Taxes
    
    Choices:Where exchange differences on deferred income tax liabilities or assets are recognized in the
income statement, such differences may be classified as either foreign exchange gains/losses or deferred
tax expense/income under IFRSsPolicy selection:Not yet determinedDifferences from existing Canadian GAAP, and expected transition impact of each:Under Canadian GAAP,
exchange differences on deferred income tax liabilities or assets are recognized in the income
statement, classified as foreign exchange gains/losses. Under IFRSs, an estimation model will likely be
used to determine the benefit to be received in relation to uncertain tax positions. This model may
differ from the model currently used under Canadian GAAP.Under IFRSs, deferred tax assets recognized in relation to share-based payment arrangements (for
example, our employee stock option plan in the US) are adjusted each period to reflect the amount of
future tax deductions that the company expects to receive based on the current market price of the
shares. The benefit of such amounts is recognized in contributed surplus, and never impacts net income.
Under the companys current Canadian GAAP policy, tax deductions for the companys employee stock option
plan in the US are recognized as reductions to tax expense, within net income, in the period that the
deduction is allowed. This difference will result in a decrease to net income in 2009 of $7 million
(2008  $33 million).Under IFRSs, adjustments relating to a change in tax rates are recognized in the same category of
comprehensive income as the original amounts were recognized. Under
Canadian GAAP, such adjustments are
recognized in net income, regardless of the category in which the original amounts were recognized. This
difference would result in $119 million being re-categorized in 2009 from net income to other
comprehensive income, related to an internal restructuring that occurred in 2009.Under IFRSs, deferred income taxes
are classified as long-term. Under Canadian GAAP, future income taxes
are separated between current and long-term on the balance sheet. This will result in a decrease in 2009
of $18 million (2008  $19 million, 2007  $Nil) in current assets and non-current liabilities on the
statement of financial position.Under IFRSs, unrealized profits resulting from intragroup transactions are eliminated from the carrying
amount of assets, but no equivalent adjustment is made for tax purposes. The difference between the tax
rates of the two entities will result in an impact on net income.
This differs from Canadian GAAP, where
current tax payable in relation to such profits is recorded as a current asset until the transaction is
realized by the groupExpected future impact:Quantification is ongoingConsolidation
    
    Choices:There are no policy choices available under IFRSsDifferences from existing Canadian GAAP:The IFRSs approach to consolidation is principles-based whereby
consolidation is required for all entities which are controlled.
Unlike the Canadian GAAP two-step model
which first requires consideration as to whether an entity is a VIE, the IFRSs guidance on consolidation
is a single model  the control model. IFRSs do bring in the concepts of risk and rewards where the
existence of control is not apparent, though not in the same rules-based manner as under current
Canadian GAAPExpected transition impact:NoneExpected future impact:None




---



##### 



71   PotashCorp 2009 Financial Review
  
  RECENT ACCOUNTING CHANGES  AccountingPolicy Area
    
    Impact of Policy AdoptionProperty, Plant and
Equipment
    
    Choices:Either a historical cost model or a revaluation model can be used to value property, plant and equipmentPolicy selection:We will value property, plant and equipment using the historical cost modelDifferences from existing Canadian GAAP:Under IFRSs, where part of an item of property, plant and equipment has a cost that is
significant in relation to the cost of the item as a whole, it must be depreciated separately from the remainder of the item.
Canadian GAAP is similar in this respect, however it has often not been applied to the same extent due to practicality and/or
materialityExpected transition impact:Quantification is ongoing, but is not expected to be significantExpected future impact:Quantification is ongoing, but is not expected to be significantInventories
    
    Choices:Either first-in, first-out (FIFO) or weighted average can be used to value inventoriesPolicy selection:The weighted average method will be used to value inventoriesDifferences from existing Canadian GAAP:NoneExpected transition impact:NoneExpected future impact:NoneBorrowing Costs
    
    Choices:There are no policy choices available under IFRSsDifferences from existing Canadian GAAP:Under IFRSs, borrowing costs will be capitalized to assets which take a substantial time to
develop or construct using a capitalization rate based on all of the companys outstanding third-party debt. Under the companys
current policy, the interest capitalization rate is based only on third-party long-term debtExpected transition impact:Equity will be reduced by $15 million in 2009 (2008 
$6 million, 2007   $2 million). Net income for 2009
would decrease by $8 million (2008  $5 million)Expected future impact:There will be an ongoing difference based on the difference in capitalization ratesFinancial
Instruments
    
    Choices:Trade date or settlement date can be usedPolicy selection:The company will recognize regular-way purchases and sales of financial assets at the trade dateDifferences from existing Canadian GAAP:NoneExpected transition impact:NoneExpected future impact:NoneDefinition of a
Derivative
    
    Choices:There are no policy choices available under IFRSsDifferences from existing Canadian GAAP:Under Canadian GAAP, when the quantity of a non-financial asset or liability to be
purchased or sold is not specified and is not otherwise determinable (for example, by reference to anticipated quantities to be used
in the calculation of penalty amounts in the event of non-performance), the contract is not accounted for as a derivative, since the
standard setters conclude its fair value would not be reliably determinable. As a result, a notional amount is also required
implicitly for a contract to meet the definition of a derivative under Canadian GAAP. The definition of a derivative under IFRSs
does not require the instrument to have a notional amount, and the lack of a notional amount does not result in an exemption from
treatment of the contract as a derivative. Whereas under Canadian GAAP such an instrument would not be accounted for as a
derivative, under IFRSs it is necessary to analyze all other features to determine whether the contract is a derivative. If so, it
is necessary to determine a reasonable estimation of what a notional amount could be, and measure the instrument at fair value as a
derivative or embedded derivative based on suchExpected transition impact:Equity will not be impacted in 2009 (2008  $Nil, 2007  increased by $7 million). Net income for 2009
will not be impacted (2008 decreased by $7 million)Expected future impact:More contracts may be categorized as derivatives (either assets or liabilities) than under Canadian GAAPEmbedded
Derivatives
    
    Choices:There are no policy choices available under IFRSsDifferences from existing
Canadian GAAP:For transitional purposes under Canadian GAAP, we elected to record embedded derivatives only
for contracts entered into or substantively modified on or after January 1, 2003. This transitional option does not exist under
IFRSs and therefore additional potential embedded derivatives were considered within contracts previously not reviewed in this
context to conclude whether bifurcation and recording were necessaryExpected transition impact:None identified to dateExpected future impact:None identified to date




---



##### 



RECENT ACCOUNTING CHANGES
  
  PotashCorp 2009 Financial
Review   72  AccountingPolicy Area
    
    Impact of Policy AdoptionHedge Accounting
    
    Differences from existing Canadian GAAP:Under Canadian GAAP, a short-cut method for assessing hedge effectiveness was permitted if the
critical terms of the hedged item and hedging instrument match. This method is not permitted under IFRSs. The company has certain
deferred amounts relating to the previous use of this method under Canadian GAAP, which will be derecognized on transition to IFRSsExpected transition impact:Equity will be increased by $2 million in 2009 (2008  $4 million, 2007  $5 million). Net income for 2009
would decrease by $2 million (2008  $1 million)Expected future impact:Net income under IFRSs will be approximately $1 million lower than under Canadian GAAP until the deferred
amounts are fully amortized under Canadian GAAP (by 2011)Statement of Cash
Flows
    
    Choices:Either the direct or indirect method may be presented. Dividends paid, interest paid, interest received and dividends
received can be presented as either operating or financing activitiesPolicy selection:The company will use the indirect methodDifferences from existing Canadian GAAP:NoneExpected transition impact:NoneExpected future impact:None




---



##### 



73   PotashCorp 2009 Financial Review
  
  RECENT ACCOUNTING CHANGES Estimated Adjustments to Net Income on Adoption of IFRSs
  (unaudited)in millions of US dollarsFor the years ended December 31
    
    2009
    
    
    2008Net Income Under Canadian GAAP
    
    $
    987.8
    
    
    $
    3,495.2IFRSs adjustments to net income (based on differences identified to date):Policy choicesEmployee
benefits  Actuarial gains and losses
    
    
    28.6
    
    
    
    7.0Provisions  Changes in decommissioning liabilities
    
    TBD
    
    
    TBDOtherEmployee benefits  Past service costs
    
    
    17.3
    
    
    
    (7.1
    )Employee benefits  Canadian GAAP transition amounts
    
    
    0.2
    
    
    
    1.7Borrowing costs
    
    
    (8.4
    )
    
    
    (4.7
    )Hedge accounting
    
    
    (1.5
    )
    
    
    (1.4
    )Financial instruments  Derivatives
    
    
    
    
    
    
    (7.3
    )Impairment of assets
    
    
    (1.0
    )
    
    
    (1.0
    )Income taxes  Tax effect of above differences
    
    TBD
    
    
    TBDIncome tax related GAAP differences  Quantified differences
    
    
    (126.3
    )
    
    
    (32.7
    ) Not yet quantified
    
    TBD
    
    
    TBD
    Estimated Adjustments to Shareholders Equity on Adoption of IFRSs
 (unaudited)in millions of US dollarsAs at December 31
    
    2009
    
    
    2008
    
    
    2007Shareholders Equity Under Canadian GAAP
    
    $
    6,500.7
    
    
    $
    4,588.9
    
    
    $
    6,018.7IFRSs adjustments to shareholders equity (based on differences identified to date):Policy choicesEmployee benefits  Actuarial gains and losses
    
    
    (364.7
    )
    
    
    (369.3
    )
    
    
    (119.5
    )Provisions  Changes in decommissioning liabilities
    
    TBD
    
    
    TBD
    
    
    TBDOtherEmployee benefits  Past service costs
    
    
    14.2
    
    
    
    (3.1
    )
    
    
    4.0Employee benefits  Canadian GAAP transition amounts
    
    
    (2.6
    )
    
    
    (2.8
    )
    
    
    (4.5
    )Borrowing costs
    
    
    (14.8
    )
    
    
    (6.4
    )
    
    
    (1.7
    )Hedge accounting
    
    
    2.4
    
    
    
    3.9
    
    
    
    5.3Financial instruments  Derivatives
    
    
    
    
    
    
    
    
    
    
    7.3Impairment of assets
    
    
    9.4
    
    
    
    10.4
    
    
    
    11.4Income taxes  Tax effect of above differences
    
    TBD
    
    
    TBD
    
    
    TBDIncome tax related GAAP differences  Not yet quantified
    
    TBD
    
    
    TBD
    
    
    TBD




---



##### 



FORWARD-LOOKING STATEMENTS
  
  PotashCorp 2009 Financial Review   74 FORWARD-LOOKING STATEMENTS




---



##### 



75   PotashCorp 2009 Financial Review
  
  11 YEAR REPORT Financial Data
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    6
    
    2002
    6
    
    2001
    6
    
    2000
    6
    
    1999
    6SalesPotash
    
    
    1,315.8
    
    
    
    4,068.1
    
    
    
    1,797.2
    
    
    
    1,227.5
    
    
    
    1,341.1
    
    
    
    1,056.1
    
    
    
    758.7
    
    
    
    669.0
    
    
    
    670.1
    
    
    
    720.1
    
    
    
    688.6Phosphate
    
    
    1,374.4
    
    
    
    2,880.7
    
    
    
    1,637.1
    
    
    
    1,255.1
    
    
    
    1,137.3
    
    
    
    977.9
    
    
    
    883.9
    
    
    
    714.0
    
    
    
    732.1
    
    
    
    868.1
    
    
    
    922.3Nitrogen
    
    
    1,286.5
    
    
    
    2,497.7
    
    
    
    1,799.9
    
    
    
    1,284.1
    
    
    
    1,368.8
    
    
    
    1,210.4
    
    
    
    1,156.4
    
    
    
    841.4
    
    
    
    993.5
    
    
    
    964.5
    
    
    
    744.7Total sales
    
    
    3,976.7
    
    
    
    9,446.5
    
    
    
    5,234.2
    
    
    
    3,766.7
    
    
    
    3,847.2
    
    
    
    3,244.4
    
    
    
    2,799.0
    
    
    
    2,224.4
    
    
    
    2,395.7
    
    
    
    2,552.7
    
    
    
    2,355.65-year CAGR 1
    
    
    4.2
    %10-year CAGR 1
    
    
    5.4
    %Gross marginPotash
    
    
    730.4
    
    
    
    3,055.5
    
    
    
    912.3
    
    
    
    561.1
    
    
    
    707.4
    
    
    
    422.8
    
    
    
    203.7
    
    
    
    220.6
    
    
    
    206.4
    
    
    
    279.0
    
    
    
    295.0Phosphate
    
    
    103.8
    
    
    
    1,114.5
    
    
    
    432.8
    
    
    
    125.3
    
    
    
    98.9
    
    
    
    15.8
    
    
    
    (16.5
    )
    
    
    41.9
    
    
    
    64.5
    
    
    
    76.8
    
    
    
    130.5Nitrogen
    
    
    191.8
    
    
    
    737.4
    
    
    
    536.1
    
    
    
    315.6
    
    
    
    318.7
    
    
    
    242.8
    
    
    
    193.2
    
    
    
    47.4
    
    
    
    94.7
    
    
    
    104.7
    
    
    
    (21.4
    )Total gross margin
    
    
    1,026.0
    
    
    
    4,907.4
    
    
    
    1,881.2
    
    
    
    1,002.0
    
    
    
    1,125.0
    
    
    
    681.4
    
    
    
    380.4
    
    
    
    309.9
    
    
    
    365.6
    
    
    
    460.5
    
    
    
    404.15-year CAGR 1
    
    
    8.5
    %10-year CAGR 1
    
    
    9.5
    %Depreciation and amortizationPotash
    
    
    40.1
    
    
    
    82.0
    
    
    
    71.7
    
    
    
    58.3
    
    
    
    64.5
    
    
    
    66.4
    
    
    
    52.4
    
    
    
    46.3
    
    
    
    34.1
    
    
    
    40.9
    
    
    
    37.2Phosphate
    
    
    163.9
    
    
    
    140.5
    
    
    
    121.1
    
    
    
    94.6
    
    
    
    95.6
    
    
    
    84.4
    
    
    
    78.9
    
    
    
    76.8
    
    
    
    72.0
    
    
    
    68.1
    
    
    
    61.8Nitrogen
    
    
    99.2
    
    
    
    97.1
    
    
    
    88.2
    
    
    
    77.6
    
    
    
    72.0
    
    
    
    79.7
    
    
    
    86.4
    
    
    
    88.0
    
    
    
    72.8
    
    
    
    66.1
    
    
    
    83.5Other
    
    
    8.9
    
    
    
    7.9
    
    
    
    10.3
    
    
    
    11.9
    
    
    
    10.3
    
    
    
    9.5
    
    
    
    9.7
    
    
    
    8.0
    
    
    
    6.8
    
    
    
    11.9
    
    
    
    8.6Total depreciation and amortization
    
    
    312.1
    
    
    
    327.5
    
    
    
    291.3
    
    
    
    242.4
    
    
    
    242.4
    
    
    
    240.0
    
    
    
    227.4
    
    
    
    219.1
    
    
    
    185.7
    
    
    
    187.0
    
    
    
    191.1Operating income (loss)
    
    
    1,192.2
    
    
    
    4,635.1
    
    
    
    1,588.5
    
    
    
    875.5
    
    
    
    892.6
    
    
    
    514.3
    
    
    
    7.4
    
    
    
    169.5
    
    
    
    228.0
    
    
    
    288.2
    
    
    
    (362.2
    )Net income (loss)* 2
    
    
    987.8
    
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (84.0
    )
    
    
    55.2
    
    
    
    94.6
    
    
    
    169.8
    
    
    
    (418.4
    )5-year CAGR 1
    
    
    27.0
    %9-year CAGR 1,3
    
    
    19.6
    %Net income (loss) per share  basic
    
    
    3.34
    
    
    
    11.37
    
    
    
    3.50
    
    
    
    2.03
    
    
    
    1.67
    
    
    
    0.92
    
    
    
    (0.26
    )
    
    
    0.18
    
    
    
    0.30
    
    
    
    0.55
    
    
    
    (1.30
    )Net income (loss) per share  diluted
    
    
    3.25
    
    
    
    11.01
    
    
    
    3.40
    
    
    
    1.98
    
    
    
    1.63
    
    
    
    0.90
    
    
    
    (0.26
    )
    
    
    0.18
    
    
    
    0.30
    
    
    
    0.55
    
    
    
    (1.30
    )Dividends per share
    
    
    0.40
    
    
    
    0.40
    
    
    
    0.35
    
    
    
    0.20
    
    
    
    0.20
    
    
    
    0.18
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17Cash provided by operating activities
    
    
    923.9
    
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8
    
    
    
    865.1
    
    
    
    658.3
    
    
    
    385.5
    
    
    
    316.4
    
    
    
    75.7
    
    
    
    480.4
    
    
    
    343.6Working capital
    
    
    711.8
    
    
    
    (348.6
    )
    
    
    809.4
    
    
    
    206.7
    
    
    
    14.7
    
    
    
    539.9
    
    
    
    176.1
    
    
    
    10.2
    
    
    
    20.5
    
    
    
    (162.8
    )
    
    
    (106.6
    )Total assets
    
    
    12,922.2
    
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0
    
    
    
    5,357.9
    
    
    
    5,126.8
    
    
    
    4,567.3
    
    
    
    4,688.2
    
    
    
    4,555.6
    
    
    
    4,126.4
    
    
    
    3,907.6Long-term debt obligations 4
    
    
    3,356.2
    
    
    
    1,758.0
    
    
    
    1,358.3
    
    
    
    1,357.1
    
    
    
    1,257.6
    
    
    
    1,258.6
    
    
    
    1,268.6
    
    
    
    1,019.9
    
    
    
    1,013.7
    
    
    
    413.7
    
    
    
    437.0Shareholders equity
    
    
    6,500.7
    
    
    
    4,588.9
    
    
    
    6,018.7
    
    
    
    2,780.3
    
    
    
    2,132.5
    
    
    
    2,385.6
    
    
    
    1,973.8
    
    
    
    2,050.2
    
    
    
    2,042.6
    
    
    
    1,994.8
    
    
    
    1,954.6Shares
outstanding at the end of the year (thousands) 5
    
    
    295,976
    
    
    
    295,201
    
    
    
    316,411
    
    
    
    314,403
    
    
    
    310,782
    
    
    
    331,893
    
    
    
    318,672
    
    
    
    312,468
    
    
    
    311,712
    
    
    
    311,046
    
    
    
    322,164
 Operating Data
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000
    
    
    1999Employees at year-end (actual #)
    
    
    5,136
    
    
    
    5,301
    
    
    
    5,003
    
    
    
    4,871
    
    
    
    4,879
    
    
    
    4,906
    
    
    
    4,904
    
    
    
    5,199
    
    
    
    4,997
    
    
    
    5,338
    
    
    
    5,498Potash production (KCI) tonnage
    
    
    3,405
    
    
    
    8,697
    
    
    
    9,159
    
    
    
    7,018
    
    
    
    8,816
    
    
    
    7,914
    
    
    
    7,094
    
    
    
    6,447
    
    
    
    6,128
    
    
    
    7,149
    
    
    
    6,388Phosphate production (P205) tonnage
    
    
    1,505
    
    
    
    1,942
    
    
    
    2,164
    
    
    
    2,108
    
    
    
    2,097
    
    
    
    1,962
    
    
    
    1,861
    
    
    
    1,512
    
    
    
    1,573
    
    
    
    2,042
    
    
    
    2,124Nitrogen production (N) tonnage
    
    
    2,551
    
    
    
    2,780
    
    
    
    2,986
    
    
    
    2,579
    
    
    
    2,600
    
    
    
    2,558
    
    
    
    2,619
    
    
    
    2,990
    
    
    
    3,032
    
    
    
    2,706
    
    
    
    3,138Potash sales  manufactured

KCI tonnes
    
    
    2,988
    
    
    
    8,547
    
    
    
    9,400
    
    
    
    7,196
    
    
    
    8,164
    
    
    
    8,276
    
    
    
    7,083
    
    
    
    6,327
    
    
    
    6,243
    
    
    
    6,912
    
    
    
    6,474Phosphate sales  manufactured
product tonnes
    
    
    3,055
    
    
    
    3,322
    
    
    
    4,151
    
    
    
    3,970
    
    
    
    3,860
    
    
    
    3,675
    
    
    
    3,560
    
    
    
    2,809
    
    
    
    2,987
    
    
    
    3,861
    
    
    
    4,002Nitrogen sales 
manufactured

product
tonnes
    
    
    4,967
    
    
    
    5,042
    
    
    
    5,731
    
    
    
    4,675
    
    
    
    4,843
    
    
    
    4,738
    
    
    
    5,370
    
    
    
    5,943
    
    
    
    5,753
    
    
    
    5,864
    
    
    
    6,270
 
 1
    
    Compound annual growth rate expressed as a percentage.2
    
    There were no extraordinary items or discontinued operations in any of the accounting periods.3
    
    1999 result was negative, therefore nine-year CAGR used.4
    
    Represents long-term debt obligations and does not include unamortized costs. (See Note 13 to the companys consolidated financial statements for description of such amounts.)5
    
    Common shares were repurchased in 2008, 2005, 2000 and 1999 in the amounts of 22.849 million, 28.500 million, 6.210 million and 1.890 million, respectively.6
    
    Prior year figures have been restated to reflect the impact of new accounting
standards on goodwill and intangible assets, including the withdrawal and amendment of certain
standards which the Canadian accounting standards setters concluded permitted deferral of
costs (such as pre-production costs) that did not meet the definition of an asset. The
standards were effective for the company on January 1, 2009, and resulted in it reclassifying
costs that were deferred as pre-production costs in 1999 through 2001, amortized in 2002 and
written off as impaired in 2003 to instead impact net income in each year incurred. The impact
of these adjustments changed net income in 2003, 2002, 2001, 2000 and 1999 by 42.3, 1.6,
(26.6), (14.1) and (3.2), respectively. The change also impacted potash sales, potash gross
margin, operating income (loss), net income (loss), working capital, total assets and
shareholders equity. The consolidated financial statements of the company have been prepared in accordance with Canadian
generally accepted accounting principles. These principles differ in certain material respects from
those applicable in the United States. (See Note 31 to the companys consolidated financial
statements.) Certain of the prior years figures have been reclassified to conform with the current
years presentation.
 *Additional Information:
    
    
    After-tax effects of items affecting net income
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2004
    
    
    2003
    
    
    2000
    
    
    1999Impairment of property, plant and equipment
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4.5
    
    
    $
    
    
    
    $
    89.7
    
    
    $
    14.5
    
    
    $
    513.8(Recovery) impairment of auction rate securities
    
    
    (91.1
    )
    
    
    66.6
    
    
    
    18.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plant shutdown and closure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.2
    
    
    
    113.5
    
    
    
    
    
    
    
    24.1Office consolidation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    9.2Loss (gain) on sale of assets
    
    
    6.1
    
    
    
    (15.6
    )
    
    
    
    
    
    
    
    
    
    
    (37.0
    )
    
    
    
    
    
    
    (16.3
    )
    
    
    Total after-tax effects on net income
    
    $
    (85.0
    )
    
    $
    51.0
    
    
    $
    18.6
    
    
    $
    4.5
    
    
    $
    (30.8
    )
    
    $
    203.2
    
    
    $
    1.5
    
    
    $
    547.1




---



##### 



FINANCIAL PERFORMANCE INDICATORS
  
  PotashCorp 2009 Financial
Review   76 Summary
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    11
    
    2002
    11
    
    2001
    11
    
    2000
    11
    
    1999
    11Net income (loss)1
    
    
    987.8
    
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (84.0
    )
    
    
    55.2
    
    
    
    94.6
    
    
    
    169.8
    
    
    
    (418.4
    )Net income (loss) per share  diluted
    
    
    3.25
    
    
    
    11.01
    
    
    
    3.40
    
    
    
    1.98
    
    
    
    1.63
    
    
    
    0.90
    
    
    
    (0.26
    )
    
    
    0.18
    
    
    
    0.30
    
    
    
    0.55
    
    
    
    (1.30
    )EBITDA2
    
    
    1,504.3
    
    
    
    4,962.6
    
    
    
    1,879.8
    
    
    
    1,117.9
    
    
    
    1,135.0
    
    
    
    754.3
    
    
    
    234.8
    
    
    
    388.6
    
    
    
    413.7
    
    
    
    480.4
    
    
    
    (169.7
    )Net income as percentage of sales
    
    
    24.8
    %
    
    
    37.0
    %
    
    
    21.1
    %
    
    
    16.8
    %
    
    
    14.1
    %
    
    
    9.2
    %
    
    
    (3.0
    %)
    
    
    2.5
    %
    
    
    4.0
    %
    
    
    6.7
    %
    
    
    (17.8
    %)EBITDA margin 3
    
    
    41.1
    %
    
    
    55.2
    %
    
    
    39.5
    %
    
    
    33.1
    %
    
    
    32.7
    %
    
    
    26.0
    %
    
    
    9.5
    %
    
    
    20.1
    %
    
    
    19.9
    %
    
    
    21.5
    %
    
    
    (8.2
    %)Cash flow prior to working capital changes 4
    
    
    1,350.9
    
    
    
    3,780.7
    
    
    
    1,525.3
    
    
    
    940.8
    
    
    
    860.3
    
    
    
    538.3
    
    
    
    368.5
    
    
    
    289.2
    
    
    
    345.8
    
    
    
    405.1
    
    
    
    321.0Cash provided by operating activities
    
    
    923.9
    
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8
    
    
    
    865.1
    
    
    
    658.3
    
    
    
    385.5
    
    
    
    316.4
    
    
    
    75.7
    
    
    
    480.4
    
    
    
    343.6Return on assets
    
    
    7.6
    %
    
    
    34.1
    %
    
    
    11.4
    %
    
    
    10.2
    %
    
    
    10.1
    %
    
    
    5.8
    %
    
    
    (1.8
    %)
    
    
    1.1
    %
    
    
    2.6
    %
    
    
    4.8
    %
    
    
    (10.5
    %)Cash flow return 5
    
    
    13.6
    %
    
    
    43.6
    %
    
    
    20.2
    %
    
    
    14.5
    %
    
    
    14.7
    %
    
    
    11.1
    %
    
    
    4.0
    %
    
    
    6.4
    %
    
    
    7.7
    %
    
    
    9.8
    %
    
    
    (3.9
    %)Weighted average cost of capital
    
    
    10.1
    %
    
    
    12.0
    %
    
    
    10.0
    %
    
    
    8.8
    %
    
    
    8.3
    %
    
    
    8.4
    %
    
    
    7.3
    %
    
    
    7.3
    %
    
    
    7.7
    %
    
    
    8.7
    %
    
    
    8.7
    %Total shareholder return
    
    
    48.7
    %
    
    
    (48.9
    %)
    
    
    201.6
    %
    
    
    79.6
    %
    
    
    (2.7
    %)
    
    
    93.4
    %
    
    
    37.5
    %
    
    
    5.2
    %
    
    
    (20.4
    %)
    
    
    64.6
    %
    
    
    (23.0
    %)Total debt to capital
    
    
    38.4
    %
    
    
    40.0
    %
    
    
    19.2
    %
    
    
    40.8
    %
    
    
    41.5
    %
    
    
    36.4
    %
    
    
    42.3
    %
    
    
    42.2
    %
    
    
    42.6
    %
    
    
    31.3
    %
    
    
    32.0
    %Net debt to capital  6
    
    
    34.7
    %
    
    
    37.8
    %
    
    
    10.6
    %
    
    
    36.4
    %
    
    
    39.9
    %
    
    
    27.5
    %
    
    
    42.2
    %
    
    
    41.5
    %
    
    
    41.3
    %
    
    
    27.8
    %
    
    
    30.4
    %Total debt to net income (loss)
    
    
    4.1
    
    
    
    0.9
    
    
    
    1.3
    
    
    
    3.0
    
    
    
    2.8
    
    
    
    4.6
    
    
    
    (17.2
    )
    
    
    27.1
    
    
    
    16.0
    
    
    
    5.3
    
    
    
    (2.2
    )Net debt to EBITDA 7
    
    
    2.4
    
    
    
    0.6
    
    
    
    0.4
    
    
    
    1.4
    
    
    
    1.2
    
    
    
    1.2
    
    
    
    6.1
    
    
    
    3.8
    
    
    
    3.6
    
    
    
    1.7
    
    
    
    (5.2
    )Reconciliations and Calculations (in millions of US dollars except share, per-share and tonnage amounts)2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
11
    
    2002
11
    
    2001
11
    
    2000
11
    
    1999
11Net income (loss) 1
    
    
    987.8
    
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (84.0
    )
    
    
    55.2
    
    
    
    94.6
    
    
    
    169.8
    
    
    
    (418.4
    )Income taxes
    
    
    83.5
    
    
    
    1,077.1
    
    
    
    416.2
    
    
    
    158.1
    
    
    
    267.4
    
    
    
    131.7
    
    
    
    0.1
    
    
    
    31.2
    
    
    
    53.1
    
    
    
    62.0
    
    
    
    6.1Interest expense
    
    
    120.9
    
    
    
    62.8
    
    
    
    68.7
    
    
    
    85.6
    
    
    
    82.3
    
    
    
    84.0
    
    
    
    91.3
    
    
    
    83.1
    
    
    
    80.3
    
    
    
    61.6
    
    
    
    51.5Depreciation and amortization
    
    
    312.1
    
    
    
    327.5
    
    
    
    291.3
    
    
    
    242.4
    
    
    
    242.4
    
    
    
    240.0
    
    
    
    227.4
    
    
    
    219.1
    
    
    
    185.7
    
    
    
    187.0
    
    
    
    191.1EBITDA 2
    
    
    1,504.3
    
    
    
    4,962.6
    
    
    
    1,879.8
    
    
    
    1,117.9
    
    
    
    1,135.0
    
    
    
    754.3
    
    
    
    234.8
    
    
    
    388.6
    
    
    
    413.7
    
    
    
    480.4
    
    
    
    (169.7
    )5-year CAGR 9
    
    
    14.8
    %9-year CAGR 9,10
    
    
    12.7
    %Net income as percentage of sales
    
    
    24.8
    %
    
    
    37.0
    %
    
    
    21.1
    %
    
    
    16.8
    %
    
    
    14.1
    %
    
    
    9.2
    %
    
    
    (3.0
    %)
    
    
    2.5
    %
    
    
    4.0
    %
    
    
    6.7
    %
    
    
    (17.8
    %)EBITDA margin 3
    
    
    41.1
    %
    
    
    55.2
    %
    
    
    39.5
    %
    
    
    33.1
    %
    
    
    32.7
    %
    
    
    26.0
    %
    
    
    9.5
    %
    
    
    20.1
    %
    
    
    19.9
    %
    
    
    21.5
    %
    
    
    (8.2
    %)Cash flow prior to working capital changes 4
    
    
    1,350.9
    
    
    
    3,780.7
    
    
    
    1,525.3
    
    
    
    940.8
    
    
    
    860.3
    
    
    
    538.3
    
    
    
    368.5
    
    
    
    289.2
    
    
    
    345.8
    
    
    
    405.1
    
    
    
    321.0Receivables
    
    
    53.1
    
    
    
    (593.7
    )
    
    
    (154.6
    )
    
    
    11.0
    
    
    
    (107.6
    )
    
    
    (51.9
    )
    
    
    (39.5
    )
    
    
    (11.1
    )
    
    
    69.9
    
    
    
    (52.2
    )
    
    
    33.8Inventories
    
    
    88.2
    
    
    
    (324.4
    )
    
    
    60.3
    
    
    
    13.9
    
    
    
    (119.9
    )
    
    
    (10.5
    )
    
    
    11.8
    
    
    
    (18.2
    )
    
    
    (76.1
    )
    
    
    (27.4
    )
    
    
    (16.1
    )Prepaid expenses and other current assets
    
    
    21.2
    
    
    
    (23.7
    )
    
    
    7.0
    
    
    
    0.2
    
    
    
    (5.8
    )
    
    
    (6.3
    )
    
    
    11.4
    
    
    
    (3.9
    )
    
    
    2.3
    
    
    
    (3.1
    )
    
    
    3.2Payables and accrued charges
    
    
    (589.5
    )
    
    
    174.3
    
    
    
    250.9
    
    
    
    (269.1
    )
    
    
    238.1
    
    
    
    188.7
    
    
    
    33.3
    
    
    
    60.4
    
    
    
    (266.2
    )
    
    
    158.0
    
    
    
    1.7Changes in non-cash operating working capital
    
    
    (427.0
    )
    
    
    (767.5
    )
    
    
    163.6
    
    
    
    (244.0
    )
    
    
    4.8
    
    
    
    120.0
    
    
    
    17.0
    
    
    
    27.2
    
    
    
    (270.1
    )
    
    
    75.3
    
    
    
    24.0Cash provided by operating activities
    
    
    923.9
    
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8
    
    
    
    865.1
    
    
    
    658.3
    
    
    
    385.5
    
    
    
    316.4
    
    
    
    75.7
    
    
    
    480.4
    
    
    
    343.6Net income (loss)
    
    
    987.8
    
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (84.0
    )
    
    
    55.2
    
    
    
    94.6
    
    
    
    169.8
    
    
    
    (418.4
    )Total assets
    
    
    12,922.2
    
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0
    
    
    
    5,357.9
    
    
    
    5,126.8
    
    
    
    4,567.3
    
    
    
    4,688.2
    
    
    
    4,555.6
    
    
    
    4,126.4
    
    
    
    3,907.6Return on assets
    
    
    7.6
    %
    
    
    34.1
    %
    
    
    11.4
    %
    
    
    10.2
    %
    
    
    10.1
    %
    
    
    5.8
    %
    
    
    (1.8
    %)
    
    
    1.1
    %
    
    
    2.6
    %
    
    
    4.8
    %
    
    
    (10.5
    %)Net income (loss)
    
    
    987.8
    
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (84.0
    )
    
    
    55.2
    
    
    
    94.6
    
    
    
    169.8
    
    
    
    (418.4
    )Income taxes
    
    
    83.5
    
    
    
    1,077.1
    
    
    
    416.2
    
    
    
    158.1
    
    
    
    267.4
    
    
    
    131.7
    
    
    
    0.1
    
    
    
    31.2
    
    
    
    53.1
    
    
    
    62.0
    
    
    
    6.1Change in
unrealized (gain) loss on
derivatives included in net income
    
    
    (56.4
    )
    
    
    68.8
    
    
    
    (16.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    120.9
    
    
    
    62.8
    
    
    
    68.7
    
    
    
    85.6
    
    
    
    82.3
    
    
    
    84.0
    
    
    
    91.3
    
    
    
    83.1
    
    
    
    80.3
    
    
    
    61.6
    
    
    
    51.5Current income taxes
    
    
    119.7
    
    
    
    (994.9
    )
    
    
    (296.6
    )
    
    
    (108.1
    )
    
    
    (227.3
    )
    
    
    (105.4
    )
    
    
    
    
    
    
    (24.2
    )
    
    
    (20.5
    )
    
    
    (32.6
    )
    
    
    (14.7
    )Depreciation and amortization
    
    
    312.1
    
    
    
    327.5
    
    
    
    291.3
    
    
    
    242.4
    
    
    
    242.4
    
    
    
    240.0
    
    
    
    227.4
    
    
    
    219.1
    
    
    
    185.7
    
    
    
    187.0
    
    
    
    191.1Cash flow 5
    
    
    1,567.6
    
    
    
    4,036.5
    
    
    
    1,566.3
    
    
    
    1,009.8
    
    
    
    907.7
    
    
    
    648.9
    
    
    
    234.8
    
    
    
    364.4
    
    
    
    393.2
    
    
    
    447.8
    
    
    
    (184.4
    )Total assets
    
    
    12,922.2
    
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0
    
    
    
    5,357.9
    
    
    
    5,126.8
    
    
    
    4,567.3
    
    
    
    4,688.2
    
    
    
    4,555.6
    
    
    
    4,126.4
    
    
    
    3,907.6Cash and cash equivalents
    
    
    (385.4
    )
    
    
    (276.8
    )
    
    
    (719.5
    )
    
    
    (325.7
    )
    
    
    (93.9
    )
    
    
    (458.9
    )
    
    
    (4.7
    )
    
    
    (24.5
    )
    
    
    (45.3
    )
    
    
    (100.0
    )
    
    
    (44.0
    )Fair value of derivative assets
    
    
    (9.0
    )
    
    
    (17.9
    )
    
    
    (135.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated depreciation of
property, plant and equipment
    
    
    2,711.7
    
    
    
    2,526.6
    
    
    
    2,280.7
    
    
    
    2,073.8
    
    
    
    1,927.7
    
    
    
    1,754.9
    
    
    
    1,576.2
    
    
    
    1,454.7
    
    
    
    1,274.3
    
    
    
    1,111.8
    
    
    
    951.0Net unrealized gains on
available-for-sale securities
    
    
    (1,900.8
    )
    
    
    (885.7
    )
    
    
    (2,284.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated amortization of other assets and intangible assets
    
    
    50.0
    
    
    
    73.4
    
    
    
    59.0
    
    
    
    72.6
    
    
    
    66.4
    
    
    
    65.1
    
    
    
    70.1
    
    
    
    59.1
    
    
    
    42.0
    
    
    
    38.0
    
    
    
    42.0Accumulated amortization of goodwill
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    4.3
    
    
    
    1.4Payables and accrued charges
    
    
    (779.3
    )
    
    
    (1,183.6
    )
    
    
    (911.5
    )
    
    
    (545.2
    )
    
    
    (842.7
    )
    
    
    (599.9
    )
    
    
    (380.3
    )
    
    
    (347.0
    )
    
    
    (271.4
    )
    
    
    (525.9
    )
    
    
    (347.7
    )Adjusted assets
    
    
    12,616.7
    
    
    
    10,492.1
    
    
    
    8,013.5
    
    
    
    7,499.8
    
    
    
    6,422.7
    
    
    
    5,895.3
    
    
    
    5,835.9
    
    
    
    5,837.8
    
    
    
    5,562.5
    
    
    
    4,654.6
    
    
    
    4,510.3Average adjusted assets
    
    
    11,554.4
    
    
    
    9,252.8
    
    
    
    7,756.7
    
    
    
    6,961.3
    
    
    
    6,159.0
    
    
    
    5,865.6
    
    
    
    5,836.9
    
    
    
    5,700.2
    
    
    
    5,108.6
    
    
    
    4,582.5
    
    
    
    4,758.0Cash flow return 5
    
    
    13.6
    %
    
    
    43.6
    %
    
    
    20.2
    %
    
    
    14.5
    %
    
    
    14.7
    %
    
    
    11.1
    %
    
    
    4.0
    %
    
    
    6.4
    %
    
    
    7.7
    %
    
    
    9.8
    %
    
    
    (3.9
    %)




---



##### 



77   PotashCorp 2009 Financial Review
  
  FINANCIAL PERFORMANCE INDICATORS RECONCILIATIONS AND CALCULATIONS continued
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    11
    
    2002
    11
    
    2001
    11
    
    2000
    11
    
    1999
    11Weighted average cost of capital
    
    
    10.1
    %
    
    
    12.0
    %
    
    
    10.0
    %
    
    
    8.8
    %
    
    
    8.3
    %
    
    
    8.4
    %
    
    
    7.3
    %
    
    
    7.3
    %
    
    
    7.7
    %
    
    
    8.7
    %
    
    
    8.7
    %End of year closing price (dollars)
    
    
    108.50
    
    
    
    73.22
    
    
    
    143.96
    
    
    
    47.83
    
    
    
    26.74
    
    
    
    27.69
    
    
    
    14.41
    
    
    
    10.60
    
    
    
    10.23
    
    
    
    13.05
    
    
    
    8.03Beginning of year opening price (dollars)
    
    
    73.22
    
    
    
    143.96
    
    
    
    47.83
    
    
    
    26.74
    
    
    
    27.69
    
    
    
    14.41
    
    
    
    10.60
    
    
    
    10.23
    
    
    
    13.05
    
    
    
    8.03
    
    
    
    10.65Change in share price (dollars)
    
    
    35.28
    
    
    
    (70.74
    )
    
    
    96.13
    
    
    
    21.09
    
    
    
    (0.95
    )
    
    
    13.28
    
    
    
    3.81
    
    
    
    0.37
    
    
    
    (2.82
    )
    
    
    5.02
    
    
    
    (2.62
    )Dividends paid per share (dollars)
    
    
    0.40
    
    
    
    0.40
    
    
    
    0.30
    
    
    
    0.20
    
    
    
    0.20
    
    
    
    0.18
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17Total shareholder return
    
    
    48.7
    %
    
    
    (48.9
    %)
    
    
    201.6
    %
    
    
    79.6
    %
    
    
    (2.7
    %)
    
    
    93.4
    %
    
    
    37.5
    %
    
    
    5.3
    %
    
    
    (20.3
    %)
    
    
    64.6
    %
    
    
    (23.0
    %)Short-term debt
    
    
    727.0
    
    
    
    1,323.9
    
    
    
    90.0
    
    
    
    157.9
    
    
    
    252.2
    
    
    
    93.5
    
    
    
    176.2
    
    
    
    473.0
    
    
    
    501.1
    
    
    
    488.8
    
    
    
    474.5Current portion of long-term debt
    
    
    1.8
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    400.4
    
    
    
    1.2
    
    
    
    10.3
    
    
    
    1.3
    
    
    
    3.4
    
    
    
    
    
    
    
    5.7
    
    
    
    7.4Long-term debt
    
    
    3,319.3
    
    
    
    1,739.5
    
    
    
    1,339.4
    
    
    
    1,357.1
    
    
    
    1,257.6
    
    
    
    1,258.6
    
    
    
    1,268.6
    
    
    
    1,019.9
    
    
    
    1,013.7
    
    
    
    413.7
    
    
    
    437.0Total debt
    
    
    4,048.1
    
    
    
    3,063.6
    
    
    
    1,429.6
    
    
    
    1,915.4
    
    
    
    1,511.0
    
    
    
    1,362.4
    
    
    
    1,446.1
    
    
    
    1,496.3
    
    
    
    1,514.8
    
    
    
    908.2
    
    
    
    918.9Cash and cash equivalents
    
    
    (385.4
    )
    
    
    (276.8
    )
    
    
    (719.5
    )
    
    
    (325.7
    )
    
    
    (93.9
    )
    
    
    (458.9
    )
    
    
    (4.7
    )
    
    
    (24.5
    )
    
    
    (45.3
    )
    
    
    (100.0
    )
    
    
    (44.0
    )Net debt 6
    
    
    3,662.7
    
    
    
    2,786.8
    
    
    
    710.1
    
    
    
    1,589.7
    
    
    
    1,417.1
    
    
    
    903.5
    
    
    
    1,441.4
    
    
    
    1,471.8
    
    
    
    1,469.5
    
    
    
    808.2
    
    
    
    874.9Shareholders equity
    
    
    6,500.7
    
    
    
    4,588.9
    
    
    
    6,018.7
    
    
    
    2,780.3
    
    
    
    2,132.5
    
    
    
    2,385.6
    
    
    
    1,973.8
    
    
    
    2,050.2
    
    
    
    2,042.6
    
    
    
    1,994.8
    
    
    
    1,954.6Total debt to capital
    
    
    38.4
    %
    
    
    40.0
    %
    
    
    19.2
    %
    
    
    40.8
    %
    
    
    41.5
    %
    
    
    36.4
    %
    
    
    42.3
    %
    
    
    42.2
    %
    
    
    42.6
    %
    
    
    31.3
    %
    
    
    32.0
    %Net debt to capital 6
    
    
    34.7
    %
    
    
    37.8
    %
    
    
    10.6
    %
    
    
    36.4
    %
    
    
    39.9
    %
    
    
    27.5
    %
    
    
    42.2
    %
    
    
    41.5
    %
    
    
    41.3
    %
    
    
    27.8
    %
    
    
    30.4
    %Total debt to net income (loss)
    
    
    4.1
    
    
    
    0.9
    
    
    
    1.3
    
    
    
    3.0
    
    
    
    2.8
    
    
    
    4.6
    
    
    
    (17.2
    )
    
    
    27.1
    
    
    
    16.0
    
    
    
    5.3
    
    
    
    (2.2
    )Net debt to EBITDA 7
    
    
    2.4
    
    
    
    0.6
    
    
    
    0.4
    
    
    
    1.4
    
    
    
    1.2
    
    
    
    1.2
    
    
    
    6.1
    
    
    
    3.8
    
    
    
    3.6
    
    
    
    1.7
    
    
    
    (5.2
    )Current assets
    
    
    2,271.7
    
    
    
    2,267.2
    
    
    
    1,811.3
    
    
    
    1,310.2
    
    
    
    1,110.8
    
    
    
    1,243.6
    
    
    
    733.9
    
    
    
    832.0
    
    
    
    819.6
    
    
    
    871.7
    
    
    
    726.2Current liabilities
    
    
    (1,559.9
    )
    
    
    (2,615.8
    )
    
    
    (1,001.9
    )
    
    
    (1,103.5
    )
    
    
    (1,096.1
    )
    
    
    (703.7
    )
    
    
    (557.8
    )
    
    
    (823.4
    )
    
    
    (772.5
    )
    
    
    (1,020.4
    )
    
    
    (831.0
    )Working capital
    
    
    711.8
    
    
    
    (348.6
    )
    
    
    809.4
    
    
    
    206.7
    
    
    
    14.7
    
    
    
    539.9
    
    
    
    176.1
    
    
    
    8.6
    
    
    
    47.1
    
    
    
    (148.7
    )
    
    
    (104.8
    )Cash and cash equivalents
    
    
    (385.4
    )
    
    
    (276.8
    )
    
    
    (719.5
    )
    
    
    (325.7
    )
    
    
    (93.9
    )
    
    
    (458.9
    )
    
    
    (4.7
    )
    
    
    (24.5
    )
    
    
    (45.3
    )
    
    
    (100.0
    )
    
    
    (44.0
    )Short-term debt
    
    
    727.0
    
    
    
    1,323.9
    
    
    
    90.0
    
    
    
    157.9
    
    
    
    252.2
    
    
    
    93.5
    
    
    
    176.2
    
    
    
    473.0
    
    
    
    501.1
    
    
    
    488.8
    
    
    
    474.5Current portion of long-term debt
    
    
    1.8
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    400.4
    
    
    
    1.2
    
    
    
    10.3
    
    
    
    1.3
    
    
    
    3.4
    
    
    
    
    
    
    
    5.7
    
    
    
    7.4Non-cash operating working capital
    
    
    1,055.2
    
    
    
    698.7
    
    
    
    180.1
    
    
    
    439.3
    
    
    
    174.2
    
    
    
    184.8
    
    
    
    348.9
    
    
    
    460.5
    
    
    
    502.9
    
    
    
    245.8
    
    
    
    333.1Sales
    
    
    3,976.7
    
    
    
    9,446.5
    
    
    
    5,234.2
    
    
    
    3,766.7
    
    
    
    3,847.2
    
    
    
    3,244.4
    
    
    
    2,799.0
    
    
    
    2,224.4
    
    
    
    2,395.7
    
    
    
    2,552.7
    
    
    
    2,355.6Freight
    
    
    191.0
    
    
    
    324.9
    
    
    
    346.1
    
    
    
    255.8
    
    
    
    249.7
    
    
    
    238.7
    
    
    
    234.5
    
    
    
    215.2
    
    
    
    216.7
    
    
    
    222.1
    
    
    
    212.5Transportation and distribution
    
    
    128.1
    
    
    
    132.4
    
    
    
    124.1
    
    
    
    134.1
    
    
    
    121.9
    
    
    
    104.3
    
    
    
    98.7
    
    
    
    80.5
    
    
    
    83.3
    
    
    
    83.1
    
    
    
    77.0Net sales 8
    
    
    3,657.6
    
    
    
    8,989.2
    
    
    
    4,764.0
    
    
    
    3,376.8
    
    
    
    3,475.6
    
    
    
    2,901.4
    
    
    
    2,465.8
    
    
    
    1,928.7
    
    
    
    2,095.7
    
    
    
    2,247.5
    
    
    
    2,066.1Potash net salesNorth American
    
    
    506.8
    
    
    
    1,307.5
    
    
    
    656.9
    
    
    
    470.5
    
    
    
    495.6
    
    
    
    347.5
    
    
    
    230.6
    
    
    
    215.3
    
    
    
    232.1
    
    
    
    237.8
    
    
    
    237.4Offshore
    
    
    698.9
    
    
    
    2,526.8
    
    
    
    909.6
    
    
    
    576.0
    
    
    
    668.3
    
    
    
    504.6
    
    
    
    336.2
    
    
    
    300.7
    
    
    
    293.4
    
    
    
    340.9
    
    
    
    325.9Miscellaneous and
purchased product
    
    
    16.3
    
    
    
    24.4
    
    
    
    13.5
    
    
    
    11.7
    
    
    
    13.0
    
    
    
    42.7
    
    
    
    52.3
    
    
    
    28.5
    
    
    
    21.2
    
    
    
    8.3
    
    
    
    2.3Total
    
    
    1,222.0
    
    
    
    3,858.7
    
    
    
    1,580.0
    
    
    
    1,058.2
    
    
    
    1,176.9
    
    
    
    894.8
    
    
    
    619.1
    
    
    
    544.5
    
    
    
    546.7
    
    
    
    587.0
    
    
    
    565.6Potash sales (thousands KCI tonnes)North American
    
    
    1,093
    
    
    
    2,962
    
    
    
    3,471
    
    
    
    2,785
    
    
    
    3,144
    
    
    
    3,246
    
    
    
    2,870
    
    
    
    2,780
    
    
    
    2,894
    
    
    
    2,939
    
    
    
    2,871Offshore
    
    
    1,895
    
    
    
    5,585
    
    
    
    5,929
    
    
    
    4,411
    
    
    
    5,020
    
    
    
    5,030
    
    
    
    4,213
    
    
    
    3,547
    
    
    
    3,349
    
    
    
    3,973
    
    
    
    3,603Total
    
    
    2,988
    
    
    
    8,547
    
    
    
    9,400
    
    
    
    7,196
    
    
    
    8,164
    
    
    
    8,276
    
    
    
    7,083
    
    
    
    6,327
    
    
    
    6,243
    
    
    
    6,912
    
    
    
    6,474Weighted average shares outstandingBasic (thousands)
    
    
    295,580
    
    
    
    307,480
    
    
    
    315,641
    
    
    
    311,880
    
    
    
    325,704
    
    
    
    323,901
    
    
    
    313,380
    
    
    
    312,126
    
    
    
    311,274
    
    
    
    314,460
    
    
    
    325,380Diluted (thousands)
    
    
    303,943
    
    
    
    317,438
    
    
    
    324,308
    
    
    
    318,689
    
    
    
    333,234
    
    
    
    332,217
    
    
    
    313,380
    
    
    
    313,896
    
    
    
    313,116
    
    
    
    316,218
    
    
    
    325,380
  Non-GAAP Financial Measures and Footnotes to Reconciliations and Calculations
    1
    
    After-tax effects of items affecting net income are as follows:
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2004
    
    
    2003
    
    
    2000
    
    
    1999Impairment of property, plant and equipment
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4.5
    
    
    $
    
    
    
    $
    89.7
    
    
    $
    14.5
    
    
    $
    513.8(Recovery) impairment of auction rate securities
    
    
    (91.1
    )
    
    
    66.6
    
    
    
    18.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plant shutdown and closure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.2
    
    
    
    113.5
    
    
    
    
    
    
    
    24.1Office consolidation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    9.2Loss (gain) on sale of assets
    
    
    6.1
    
    
    
    (15.6
    )
    
    
    
    
    
    
    
    
    
    
    (37.0
    )
    
    
    
    
    
    
    (16.3
    )
    
    
    Total after-tax effects on net income
    
    $
    (85.0
    )
    
    $
    51.0
    
    
    $
    18.6
    
    
    $
    4.5
    
    
    $
    (30.8
    )
    
    $
    203.2
    
    
    $
    1.5
    
    
    $
    547.1




---



##### 



FINANCIAL PERFORMANCE INDICATORS
  
  PotashCorp 2009 Financial
Review   78 Non-GAAP Financial Measures and Footnotes to Reconciliations and Calculations
  2
    
    PotashCorp uses EBITDA and adjusted EBITDA as supplemental financial measures of its
operational performance. Management believes EBITDA and adjusted EBITDA to be important
measures as they exclude the effects of items which primarily reflect the impact of long-term
investment decisions, rather than the performance of the companys day-to-day operations. As
compared to net income (loss) according to GAAP, these measures are limited in that they do
not reflect the periodic costs of certain capitalized tangible and intangible assets used in
generating revenues in the companys business, or the non-cash charges associated with
impairments and shutdown-related costs, or gain on sale of long-term investments. Management
evaluates such items through other financial measures such as capital expenditures and cash
flow provided by operating activities. The company believes that these measurements are useful
to measure a companys ability to service debt and to meet other payment obligations or as a
valuation measurement. EBITDA has not been adjusted for the non-cash effects of the following
items:
 2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2004
    
    
    2003
    
    
    2000
    
    
    1999Impairment of property, plant and equipment
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6.3
    
    
    $
    
    
    
    $
    132.4
    
    
    $
    14.5
    
    
    $
    530.4(Recovery) impairment of auction rate securities
    
    
    (115.3
    )
    
    
    88.8
    
    
    
    26.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plant shutdown and closure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.2
    
    
    
    113.5
    
    
    
    
    
    
    
    24.1Office consolidation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.2Gain on sale of assets
    
    
    
    
    
    
    (21.4
    )
    
    
    
    
    
    
    
    
    
    
    (37.0
    )
    
    
    
    
    
    
    (20.1
    )
    
    
    Total non-cash items included in EBITDA
    
    
    (115.3
    )
    
    
    67.4
    
    
    
    26.5
    
    
    
    6.3
    
    
    
    (30.8
    )
    
    
    245.9
    
    
    
    (5.6
    )
    
    
    563.7EBITDA
    
    
    1,504.3
    
    
    
    4,962.6
    
    
    
    1,879.8
    
    
    
    1,117.9
    
    
    
    754.3
    
    
    
    234.8
    
    
    
    480.4
    
    
    
    (161.9
    )Adjusted EBITDA
    
    $
    1,389.0
    
    
    $
    5,030.0
    
    
    $
    1,906.3
    
    
    $
    1,124.2
    
    
    $
    723.5
    
    
    $
    480.7
    
    
    $
    474.8
    
    
    $
    401.8
 3
    
    EBITDA margin is calculated as EBITDA divided by net sales (sales less freight and
transportation and distribution). Management believes comparing the companys operations
(excluding the impact of long-term investment decisions) to net sales earned (net of costs to
deliver product) is an important indicator of efficiency. In addition to the limitations given
above in using EBITDA as compared to net income, EBITDA margin as compared to net income as a
percentage of sales is also limited in that freight and transportation and distribution costs
are incurred and valued independently of sales. Management evaluates these expenses
individually on the consolidated statements of operations.4
    
    Cash flow prior to working capital changes is defined as the cash provided by operating
activities, exclusive of changes in non-cash operating working capital. PotashCorp uses cash
flow prior to working capital changes as a supplemental financial measure in its evaluation of
liquidity. Management believes that adjusting principally for the swings in non-cash working
capital items due to seasonality assists management in making long-term liquidity assessments.
The company also believes that this measurement is useful as a measure of liquidity or as a
valuation measurement.5
    
    PotashCorp uses cash flow and cash flow return as supplemental measures to evaluate the
performance of the companys assets in terms of the cash flow they have generated. Calculated
on the total cost basis of the companys assets rather than on
the depreciated value, these
measures reflect cash returned on the total investment outlay. The company believes these
measures are one of the best predictors of shareholder value. As such, management believes
this information to be useful to investors.6
    
    Management believes that net debt and net-debt-to-capital ratio are useful to investors
because they are helpful in determining the companys leverage. It also believes that, since
the company has the ability to and may elect to use a portion of cash and cash equivalents to
retire debt or to incur additional expenditures without increasing debt, it is appropriate to
apply cash and cash equivalents to debt in calculating net debt and net debt to capital.
PotashCorp believes that this measurement is useful as a financial leverage measure.7
    
    Net debt to EBITDA shows the maximum amount of years it would take to retire PotashCorps net
debt using the current years EBITDA and helps PotashCorp evaluate the appropriateness of
current
debt levels relative to earnings generated by operations. In addition to the limitation of using
EBITDA discussed above, net debt to EBITDA is limited in that this measure assumes all earnings
are used to repay principal and no interest payments or taxes.8
    
    Management includes net sales in its segment disclosures in the consolidated financial
statements pursuant to Canadian GAAP, which requires segmentation based upon the companys
internal organization and reporting of revenue and profit measures derived from internal
accounting methods. As a component of gross margin, net sales (and related per-tonne amounts
and other ratios) are primary revenue measures it uses and reviews in making decisions about
operating matters on a business segment basis. These decisions include assessments about
potash, nitrogen and phosphate performance and the resources to be allocated to these
segments. It also uses net sales (and related per-tonne amounts and other ratios) for business
segment planning and monthly forecasting. Net sales are calculated as sales revenues less
freight, transportation and distribution expenses. Net sales presented on a consolidated basis
rather than by business segment is considered a non-GAAP financial measure.9
    
    Compound annual growth rate expressed as a percentage.10
    
    1999 results were negative, therefore nine-year CAGR used.11
    
    Prior year figures have been restated to reflect the impact of new accounting standards on
goodwill and intangible assets, including the withdrawal and amendment of certain standards
which the Canadian accounting standards setters concluded permitted deferral of costs (such as
pre-production costs) that did not meet the definition of an asset. The standards were
effective for the company on January 1, 2009, and resulted in it reclassifying costs that were
deferred as pre-production costs in
1999 through 2001, amortized in 2002 and written off as impaired in 2003 to instead impact net
income in each year incurred. The impact of these adjustments changed
net income in 2003, 2002,
 2001, 2000 and 1999 by 42.3, 1.6, (26.6), (14.1) and (3.2), respectively. The change also impacted
net income (loss) per share  diluted, EBITDA, cash flow prior to working capital changes, return
on assets, cash flow return, total debt to capital and net debt to capital.
 Financial Terms
 Adjusted EBITDA
 Average adjusted assets
 Cash flow
 Cash flow return
 Current income taxes
 EBITDA
 EBITDA margin
 Market value of total capital
 Net debt to capital
 Net debt to EBITDA
 Net sales
 Return on assets
 Total debt to capital
 Total debt to net income or loss
 Total shareholder return
 Weighted average cost of capital




---



##### 



79   PotashCorp 2009 Financial Review
  
  MANAGEMENTS RESPONSIBILITY 
 MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
 Managements Report on Financial Statements
       Managements Report on Internal Control Over Financial Reporting
 Internal Control  Integrated Framework
  -s- W. Doyle
    
    -s- W. BrownleeW. Doyle
    
    W. BrownleePresident and
    
    Executive Vice President andChief Executive Officer
    
    Chief Financial OfficerFebruary 19, 2010




---



##### 



ACCOUNTANTS REPORTS
  
  PotashCorp 2009 Financial
Review   80 
 REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
 To the Board of Directors and Shareholders of Potash
Corporation of Saskatchewan Inc.
 Internal ControlIntegrated Framework
    Internal
ControlIntegrated Framework




---



##### 



81   PotashCorp 2009 Financial Review REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
 To the Board of Directors and Shareholders of Potash Corporation of Saskatchewan Inc.
    Internal ControlIntegrated Framework




---



##### 



CONSOLIDATED FINANCIAL STATEMENTS
  
  PotashCorp 2009 Financial
Review   82 Consolidated Statements of Financial Position
 As at December 31
    
    in millions of US dollars except share amountsNotes
    
    
    
    
    2009
    
    
    2008AssetsCurrent assetsCash and cash equivalents
    
    $
    385.4
    
    
    $
    276.8NOTE 3
    
    Receivables
    
    
    1,137.9
    
    
    
    1,189.9NOTE 4
    
    Inventories
    
    
    623.5
    
    
    
    714.9NOTE 5
    
    Prepaid expenses and other current assets
    
    
    124.9
    
    
    
    85.62,271.7
    
    
    
    2,267.2NOTE 7
    
    Property, plant and equipment
    
    
    6,413.3
    
    
    
    4,812.2NOTE 8
    
    Investments
    
    
    3,760.3
    
    
    
    2,750.7NOTE 9
    
    Other assets
    
    
    359.9
    
    
    
    300.2NOTE 10
    
    Intangible assets
    
    
    20.0
    
    
    
    21.5NOTE 10
    
    Goodwill
    
    
    97.0
    
    
    
    97.0$
    12,922.2
    
    
    $
    10,248.8LiabilitiesCurrent liabilitiesNOTE 11, 13
    
    Short-term debt and current portion of long-term debt
    
    $
    728.8
    
    
    $
    1,324.1NOTE 12
    
    Payables and accrued charges
    
    
    779.3
    
    
    
    1,183.6NOTE 6
    
    Current portion of derivative instrument liabilities
    
    
    51.8
    
    
    
    108.11,559.9
    
    
    
    2,615.8NOTE 13
    
    Long-term debt
    
    
    3,319.3
    
    
    
    1,739.5NOTE 6
    
    Derivative instrument liabilities
    
    
    123.2
    
    
    
    120.4NOTE 23
    
    Future income tax liability
    
    
    999.3
    
    
    
    794.2NOTE 15
    
    Accrued pension and other post-retirement benefits
    
    
    280.8
    
    
    
    253.4NOTE 16
    
    Accrued environmental costs and asset retirement obligations
    
    
    134.8
    
    
    
    133.4Other non-current liabilities and deferred credits
    
    
    4.2
    
    
    
    3.26,421.5
    
    
    
    5,659.9NOTE 14
    
    CommitmentsNOTE 28
    
    ContingenciesNOTE 29
    
    GuaranteesShareholders EquityNOTE 17
    
    Share capital
    
    
    1,430.3
    
    
    
    1,402.5Unlimited authorization of common shares without par value;
issued and outstanding 295,975,550 and 295,200,987 shares
at December 31, 2009 and 2008, respectivelyUnlimited authorization of first preferred shares; none outstandingNOTE 18
    
    Contributed surplus
    
    
    149.5
    
    
    
    126.2Accumulated other comprehensive income
    
    
    1,648.8
    
    
    
    657.9Retained earnings
    
    
    3,272.1
    
    
    
    2,402.36,500.7
    
    
    
    4,588.9$
    12,922.2
    
    
    $
    10,248.8
    (SIGNATURE)
    
    (SIGNATURE)Director
    
    Director




---



##### 



83   PotashCorp 2009 Financial Review Consolidated Statements of Operations and Retained Earnings
 For the years ended December 31
    
    in millions of US dollars except per-share amountsNotes
    
    
    
    
    2009
    
    
    2008
    
    
    2007NOTE 19
    
    Sales
    
    $
    3,976.7
    
    
    $
    9,446.5
    
    
    $
    5,234.2Less: Freight
    
    
    191.0
    
    
    
    324.9
    
    
    
    346.1Transportation and distribution
    
    
    128.1
    
    
    
    132.4
    
    
    
    124.1Cost of goods sold
    
    
    2,631.6
    
    
    
    4,081.8
    
    
    
    2,882.8Gross Margin
    
    
    1,026.0
    
    
    
    4,907.4
    
    
    
    1,881.2Selling and administrative
    
    
    183.6
    
    
    
    188.4
    
    
    
    212.6NOTE 20
    
    Provincial mining and other taxes
    
    
    29.0
    
    
    
    543.4
    
    
    
    135.4Foreign exchange (gain) loss
    
    
    (35.4
    )
    
    
    (126.0
    )
    
    
    70.2NOTE 21
    
    Other income
    
    
    (343.4
    )
    
    
    (333.5
    )
    
    
    (125.5
    )(166.2
    )
    
    
    272.3
    
    
    
    292.7Operating Income
    
    
    1,192.2
    
    
    
    4,635.1
    
    
    
    1,588.5NOTE 22
    
    Interest Expense
    
    
    120.9
    
    
    
    62.8
    
    
    
    68.7Income Before Income Taxes
    
    
    1,071.3
    
    
    
    4,572.3
    
    
    
    1,519.8NOTE 23
    
    Income Taxes
    
    
    83.5
    
    
    
    1,077.1
    
    
    
    416.2Net Income
    
    
    987.8
    
    
    
    3,495.2
    
    
    
    1,103.6Retained Earnings, Beginning of Year
    
    
    2,402.3
    
    
    
    2,279.6
    
    
    
    1,286.4Repurchase of Common Shares
    
    
    
    
    
    
    (3,250.3
    )
    
    
    Change in Accounting Policy
    
    
    
    
    
    
    
    
    
    
    0.2Dividends
    
    
    (118.0
    )
    
    
    (122.2
    )
    
    
    (110.6
    )Retained Earnings, End of Year
    
    $
    3,272.1
    
    
    $
    2,402.3
    
    
    $
    2,279.6NOTE 24
    
    Net Income per Share  Basic
    
    $
    3.34
    
    
    $
    11.37
    
    
    $
    3.50NOTE 24
    
    Net Income per Share  Diluted
    
    $
    3.25
    
    
    $
    11.01
    
    
    $
    3.40Dividends per Share
    
    $
    0.40
    
    
    $
    0.40
    
    
    $
    0.35




---



##### 



CONSOLIDATED FINANCIAL STATEMENTS
  
  PotashCorp 2009 Financial
Review   84 Consolidated Statements of Cash Flow
 For the years ended December 31
    
    
    

    in millions of US dollars2009
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    2007Operating ActivitiesNet income
    
    
    
    
    
    $
    987.8
    
    
    
    
    
    
    $
    3,495.2
    
    
    
    
    
    
    $
    1,103.6Adjustments to reconcile net income to cash provided by operating activitiesDepreciation and amortization
    
    
    312.1
    
    
    
    
    
    
    
    327.5
    
    
    
    
    
    
    
    291.3Stock-based compensation
    
    
    29.5
    
    
    
    
    
    
    
    36.2
    
    
    
    
    
    
    
    38.6Loss (gain) on disposal of property, plant and equipment
and long-term investments
    
    
    7.7
    
    
    
    
    
    
    
    (27.1
    )
    
    
    
    
    
    
    7.9(Gain on disposal of) provision for auction rate securities
    
    
    (115.3
    )
    
    
    
    
    
    
    88.8
    
    
    
    
    
    
    
    26.5Foreign exchange on future income tax
    
    
    (1.3
    )
    
    
    
    
    
    
    (106.4
    )
    
    
    
    
    
    
    52.4Provision for future income tax
    
    
    203.2
    
    
    
    
    
    
    
    82.2
    
    
    
    
    
    
    
    119.6Undistributed earnings of equity investees
    
    
    (2.8
    )
    
    
    
    
    
    
    (166.7
    )
    
    
    
    
    
    
    (35.6
    )Derivative instruments
    
    
    (62.0
    )
    
    
    
    
    
    
    48.7
    
    
    
    
    
    
    
    (21.1
    )Other long-term liabilities
    
    
    (8.0
    )
    
    
    
    
    
    
    2.3
    
    
    
    
    
    
    
    (57.9
    )Subtotal of adjustments
    
    
    
    
    
    
    363.1
    
    
    
    
    
    
    
    285.5
    
    
    
    
    
    
    
    421.7Changes in non-cash operating working capitalReceivables
    
    
    53.1
    
    
    
    
    
    
    
    (593.7
    )
    
    
    
    
    
    
    (154.6
    )Inventories
    
    
    88.2
    
    
    
    
    
    
    
    (324.4
    )
    
    
    
    
    
    
    60.3Prepaid expenses and other current assets
    
    
    21.2
    
    
    
    
    
    
    
    (23.7
    )
    
    
    
    
    
    
    7.0Payables and accrued charges
    
    
    (589.5
    )
    
    
    
    
    
    
    174.3
    
    
    
    
    
    
    
    250.9Subtotal of changes in non-cash operating working capital
    
    
    
    
    
    
    (427.0
    )
    
    
    
    
    
    
    (767.5
    )
    
    
    
    
    
    
    163.6Cash provided by operating activities
    
    
    
    
    
    
    923.9
    
    
    
    
    
    
    
    3,013.2
    
    
    
    
    
    
    
    1,688.9Investing ActivitiesAdditions to property, plant and equipment
    
    
    
    
    
    
    (1,763.8
    )
    
    
    
    
    
    
    (1,198.3
    )
    
    
    
    
    
    
    (607.2
    )Purchase of long-term investments
    
    
    
    
    
    
    (3.2
    )
    
    
    
    
    
    
    (445.6
    )
    
    
    
    
    
    
    (30.7
    )Proceeds from disposal of property, plant and equipment
and long-term investments
    
    
    
    
    
    
    19.4
    
    
    
    
    
    
    
    43.2
    
    
    
    
    
    
    
    4.5Proceeds from disposal of (purchase of investments in)
auction rate securities
    
    
    
    
    
    
    132.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132.5
    )Other assets and intangible assets
    
    
    
    
    
    
    (54.1
    )
    
    
    
    
    
    
    (46.6
    )
    
    
    
    
    
    
    7.8Cash used in investing activities
    
    
    
    
    
    
    (1,669.2
    )
    
    
    
    
    
    
    (1,647.3
    )
    
    
    
    
    
    
    (758.1
    )Cash before financing activities
    
    
    
    
    
    
    (745.3
    )
    
    
    
    
    
    
    1,365.9
    
    
    
    
    
    
    
    930.8Financing ActivitiesProceeds from long-term debt obligations
    
    
    
    
    
    
    4,108.7
    
    
    
    
    
    
    
    400.0
    
    
    
    
    
    
    
    1.5Repayment and finance costs of long-term debt obligations
    
    
    
    
    
    
    (3,561.3
    )
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    (403.6
    )Proceeds from (repayment of) short-term debt obligations
    
    
    
    
    
    
    403.2
    
    
    
    
    
    
    
    1,233.9
    
    
    
    
    
    
    
    (67.9
    )Dividends
    
    
    
    
    
    
    (116.9
    )
    
    
    
    
    
    
    (122.6
    )
    
    
    
    
    
    
    (93.6
    )Repurchase of common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,356.4
    )
    
    
    
    
    
    
    Issuance of common shares
    
    
    
    
    
    
    20.2
    
    
    
    
    
    
    
    36.7
    
    
    
    
    
    
    
    26.6Cash provided by (used in) financing activities
    
    
    
    
    
    
    853.9
    
    
    
    
    
    
    
    (1,808.6
    )
    
    
    
    
    
    
    (537.0
    )Increase (Decrease) in Cash and Cash Equivalents
    
    
    
    
    
    
    108.6
    
    
    
    
    
    
    
    (442.7
    )
    
    
    
    
    
    
    393.8Cash and Cash Equivalents, Beginning of Year
    
    
    
    
    
    
    276.8
    
    
    
    
    
    
    
    719.5
    
    
    
    
    
    
    
    325.7Cash and Cash Equivalents, End of Year
    
    
    
    
    
    $
    385.4
    
    
    
    
    
    
    $
    276.8
    
    
    
    
    
    
    $
    719.5Cash and cash equivalents comprised of:Cash
    
    
    
    
    
    $
    121.6
    
    
    
    
    
    
    $
    29.9
    
    
    
    
    
    
    $
    23.1Short-term investments
    
    
    
    
    
    
    263.8
    
    
    
    
    
    
    
    246.9
    
    
    
    
    
    
    
    696.4$
    385.4
    
    
    
    
    
    
    $
    276.8
    
    
    
    
    
    
    $
    719.5Supplemental cash flow disclosureInterest paid
    
    
    
    
    
    $
    115.4
    
    
    
    
    
    
    $
    82.8
    
    
    
    
    
    
    $
    93.9Income taxes paid
    
    
    
    
    
    $
    640.3
    
    
    
    
    
    
    $
    669.9
    
    
    
    
    
    
    $
    221.0




---



##### 



85   PotashCorp 2009 Financial Review Consolidated Statements of Comprehensive Income (Loss)
 For the years ended December 31
    
    
    
    
    
    in millions of US dollars(Net of related income taxes)
    
    2009
    
    
    2008
    
    
    2007Net Income
    
    $
    987.8
    
    
    $
    3,495.2
    
    
    $
    1,103.6Other comprehensive income (loss)Net increase (decrease) in unrealized gains on
available-for-sale securities 1
    
    
    988.6
    
    
    
    (1,336.9
    )
    
    
    1,309.1Net (losses) gains on derivatives designated as cash flow hedges 2
    
    
    (63.9
    )
    
    
    (166.0
    )
    
    
    34.6Reclassification to income of net losses (gains) on cash flow hedges 3
    
    
    53.1
    
    
    
    (8.1
    )
    
    
    (40.5
    )Unrealized foreign exchange gains (losses) on translation of
self-sustaining foreign operations
    
    
    13.1
    
    
    
    (10.0
    )
    
    
    6.7Other Comprehensive Income (Loss)
    
    $
    990.9
    
    
    $
    (1,521.0
    )
    
    $
    1,309.9Comprehensive Income
    
    $
    1,978.7
    
    
    $
    1,974.2
    
    
    $
    2,413.5
 1
    
    Available-for-sale securities are comprised of shares in Israel Chemicals Ltd., Sinofert Holdings Limited and investments in auction rate securities, and are net of income taxes of $26.5
(2008  $(61.5), 2007  $87.1).2
    
    Cash flow hedges are comprised of natural gas derivative instruments, and are net of income taxes of $(38.7) (2008  $(100.8), 2007  $14.8).3
    
    Net of income taxes of $32.2 (2008  $(4.8), 2007  $(17.3)). Consolidated Statements of Accumulated Other Comprehensive Income
 As at December 31
    
    In millions of US dollars(Net of related income taxes)
    
    2009
    
    
    2008Net unrealized gains on available-for-sale securities 1
    
    $
    1,750.4
    
    
    $
    761.8Net unrealized losses on derivatives designated as cash flow hedges 2
    
    
    (111.4
    )
    
    
    (100.6
    )Unrealized foreign exchange gains (losses) on self-sustaining foreign operations 3
    
    
    9.8
    
    
    
    (3.3
    )Accumulated other comprehensive income
    
    
    1,648.8
    
    
    
    657.9Retained earnings
    
    
    3,272.1
    
    
    
    2,402.3Accumulated Other Comprehensive Income and Retained Earnings
    
    $
    4,920.9
    
    
    $
    3,060.2
 1
    
    $1,900.8 before income taxes (2008  $885.7).2
    
    $(177.6) before income taxes (2008  $(160.2)).3
    
    $9.8 before income taxes (2008  $(3.3)).




---



##### 



Notes
 NOTE 1
    
    Description of Business
    
    
    86NOTE 2
    
    Basis of Presentation
    
    
    86NOTE 3
    
    Receivables
    
    
    88NOTE 4
    
    Inventories
    
    
    89NOTE 5
    
    Prepaid Expenses and
Other Current Assets
    
    
    89NOTE 6
    
    Derivative Instruments
    
    
    89NOTE 7
    
    Property, Plant and Equipment
    
    
    91NOTE 8
    
    Investments
    
    
    91NOTE 9
    
    Other Assets
    
    
    93NOTE 10
    
    Intangible Assets and Goodwill
    
    
    93NOTE 11
    
    Short-Term Debt
    
    
    93NOTE 12
    
    Payables and Accrued Charges
    
    
    94NOTE 13
    
    Long-Term Debt
    
    
    94NOTE 14
    
    Commitments
    
    
    95NOTE 15
    
    Pension and Other
Post-Retirement Benefits
    
    
    96NOTE 16
    
    Environmental Costs and Asset
Retirement Obligations
    
    
    100NOTE 17
    
    Share Capital
    
    
    102NOTE 18
    
    Contributed Surplus
    
    
    102NOTE 19
    
    Segment Information
    
    
    102NOTE 20
    
    Provincial Mining and Other Taxes
    
    
    105NOTE 21
    
    Other Income
    
    
    105NOTE 22
    
    Interest Expense
    
    
    106NOTE 23
    
    Income Taxes
    
    
    106NOTE 24
    
    Net Income per Share
    
    
    108NOTE 25
    
    Stock-Based Compensation
    
    
    109NOTE 26
    
    Financial Instruments and
Related Risk Management
    
    
    111NOTE 27
    
    Capital Management
    
    
    118NOTE 28
    
    Contingencies
    
    
    119NOTE 29
    
    Guarantees
    
    
    121NOTE 30
    
    Related Party Transactions
    
    
    122NOTE 31
    
    Reconciliation of Canadian and United States Generally Accepted
Accounting Principles
    
    
    122NOTE 32
    
    Comparative Figures
    
    
    133




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   86 NOTE 1 DESCRIPTION OF BUSINESS
 
  
    
    Potash
 
    
    five mines and mills and mining rights to potash reserves at a sixth location, all in the province of Saskatchewan
    
    one mine and mill in the province of New Brunswick
 
    
    Phosphate
 
    
    a mine and processing plants in the state of North Carolina
    
    a mine and two processing plants in the state of Florida
    
    a processing plant in the state of Louisiana
    
    phosphate feed plants in the states of Nebraska, Illinois, Missouri, North Carolina and Florida
    
    an industrial phosphoric acid plant in the state of Ohio
 
    
    Nitrogen
 
    
    three plants in the states of Georgia, Louisiana and Ohio
    
    large-scale operations in Trinidad
  NOTE 2 BASIS OF PRESENTATION
 
     Principles of Consolidation
  
    
    PCS Sales (Canada) Inc.
 
    
    PCS Joint Venture, Ltd. (PCS Joint Venture)
 
    
    PCS Sales (USA), Inc.
    
    PCS Phosphate Company, Inc. (PCS Phosphate)
 
    
    PCS Purified Phosphates
 
    
    White Springs Agricultural Chemicals, Inc. (White Springs)
    
    PCS Nitrogen Fertilizer, L.P.
    
    PCS Nitrogen Ohio, L.P.
    
    PCS Nitrogen Trinidad Limited
    
    PCS Cassidy Lake Company (PCS Cassidy Lake)
  Foreign Exchange Transactions




---



##### 



87   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 2 BASIS OF PRESENTATION continued
   Cash Equivalents
  Asset Impairment
    Selling and Administrative
  Additional Accounting Policies
  Note
    
    Topic
    
    Page3
    
    
    Receivables
    
    
    884
    
    
    Inventories
    
    
    895
    
    
    Prepaid Expenses
    
    
    896
    
    
    Derivative Instruments
    
    
    897
    
    
    Property, Plant and Equipment
    
    
    918
    
    
    Investments
    
    
    919
    
    
    Other Assets
    
    
    9310
    
    
    Intangible Assets
    
    
    9310
    
    
    Goodwill
    
    
    9313
    
    
    Long-Term Debt
    
    
    9414
    
    
    Lease Commitments
    
    
    9515
    
    
    Pension and Other Post-Retirement Benefits
    
    
    9616
    
    
    Environmental Costs and Asset Retirement Obligations
    
    
    10019
    
    
    Revenue Recognition
    
    
    10223
    
    
    Income Taxes
    
    
    10625
    
    
    Stock-Based Compensation
    
    
    10926
    
    
    Fair Value of Financial Instruments
    
    
    111
 Change in Accounting Policy
 Goodwill and Intangible Assets
  Recent Accounting Pronouncements
 IFRSs




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   88 NOTE 2 BASIS OF PRESENTATION continued
  Credit Risk and the Fair Value of Financial Assets and Financial Liabilities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements
  Mining Exploration Costs
  Financial Instrument Disclosures
  NOTE 3 RECEIVABLES
 
  2009
    
    
    2008Trade accounts  Canpotex
    
    $
    164.3
    
    
    $
    691.2 Other
    
    
    264.4
    
    
    
    342.7Less allowance for doubtful accounts
    
    
    (8.4
    )
    
    
    (7.7
    )420.3
    
    
    
    1,026.2Income taxes receivable
    
    
    287.4
    
    
    
    Provincial mining and other taxes receivable
    
    
    234.6
    
    
    
    Margin deposits on derivative instruments
    
    
    108.9
    
    
    
    91.1Other non-trade accounts
    
    
    86.7
    
    
    
    72.6$
    1,137.9
    
    
    $
    1,189.9




---



##### 



89   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 4 INVENTORIES
 
  2009
    
    
    2008Finished products
    
    $
    303.1
    
    
    $
    421.8Intermediate products
    
    
    158.9
    
    
    
    117.1Raw materials
    
    
    50.6
    
    
    
    67.8Materials and supplies
    
    
    110.9
    
    
    
    108.2$
    623.5
    
    
    $
    714.9
 Items affecting cost of goods sold
    
    2009
    
    
    2008
    
    
    2007Expensed inventories
    
    $
    2,170.2
    
    
    $
    3,803.9
    
    
    $
    2,806.4Writedowns of finished products
    
    
    49.2
    
    
    
    89.9
    
    
    
    Writedowns of intermediate
products
    
    
    5.4
    
    
    
    
    
    
    
    Writedowns of raw materials
    
    
    1.4
    
    
    
    
    
    
    
    Reserves for obsolete materials
and supplies
    
    
    2.7
    
    
    
    3.2
    
    
    
    4.7Reversals of writedowns
    
    
    (8.4
    )
    
    
    
    
    
    
    $
    2,220.5
    
    
    $
    3,897.0
    
    
    $
    2,811.1
  NOTE 5 PREPAID EXPENSES AND OTHER CURRENT ASSETS
 
  2009
    
    
    2008Prepaid freight
    
    $
    31.2
    
    
    $
    24.3Prepaid transportation and distribution
    
    
    17.5
    
    
    
    15.4Other prepaid expenses
    
    
    14.8
    
    
    
    20.663.5
    
    
    
    60.3Income taxes on inventory transfers
    
    
    38.0
    
    
    
    Current portion of future income tax asset (Note 23)
    
    
    17.6
    
    
    
    18.9Current portion of derivative instrument assets (Note 6)
    
    
    5.8
    
    
    
    6.4$
    124.9
    
    
    $
    85.6
 NOTE 6 DERIVATIVE INSTRUMENTS




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   90 NOTE 6 DERIVATIVE INSTRUMENTS continued
    
    
    Natural gas futures, swaps and option agreements to manage the cost of natural gas, generally
designated as cash flow hedges of anticipated transactions. The portion of gain or loss on
derivative instruments designated as cash flow hedges that is deferred in accumulated other
comprehensive income (AOCI) is reclassified into cost of goods sold when the product
containing the hedged item impacts earnings. Any hedge ineffectiveness is recorded in cost of
goods sold in the current period.
 
    
    Foreign currency forward contracts for the primary purpose of limiting exposure to exchange
rate fluctuations relating to expenditures denominated in currencies other than the US dollar
and foreign currency swap contracts to limit exposure to exchange rate fluctuations relating to
Canadian dollar-denominated commercial paper. These contracts are not designated as hedging
instruments for accounting purposes. Accordingly, they are marked-to-market with changes in
fair value recognized through foreign exchange gain or loss in earnings.
 
    
    Agreement for the forward purchase of shares of Sinofert Holdings Limited (Sinofert) in
2007 at a fixed Hong Kong dollar amount per share. This contract was not designated as a
hedging instrument for accounting purposes. Accordingly, changes in fair value were recognized
through other income in 2008 earnings.
 
    
    Interest rate swaps designated as fair value hedges to manage the interest rate mix of the
companys total debt portfolio and related overall cost of borrowing. Hedge accounting
treatment resulted in interest expense on the related debt being reflected at hedged rates
rather than original contractual interest rates.
 2009Assets
    
    
    Liabilities
    
    
    NetNatural gas
hedging derivatives
    
    $
    3.7
    
    
    $
    174.7
    
    
    $
    (171.0
    )Foreign currency
derivatives
    
    
    5.3
    
    
    
    0.3
    
    
    
    5.0Total
    
    
    9.0
    
    
    
    175.0
    
    
    
    (166.0
    )Less current portion
    
    
    (5.8
    )
    
    
    (51.8
    )
    
    
    46.0Long-term portion
    
    $
    3.2
    
    
    $
    123.2
    
    
    $
    (120.0
    )
 2008Assets
    
    
    Liabilities
    
    
    NetNatural gas
hedging derivatives
    
    $
    11.6
    
    
    $
    170.6
    
    
    $
    (159.0
    )Foreign currency
derivatives
    
    
    6.3
    
    
    
    57.9
    
    
    
    (51.6
    )Total
    
    
    17.9
    
    
    
    228.5
    
    
    
    (210.6
    )Less current portion
    
    
    (6.4
    )
    
    
    (108.1
    )
    
    
    101.7Long-term portion
    
    $
    11.5
    
    
    $
    120.4
    
    
    $
    (108.9
    )




---



##### 



91   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 7 PROPERTY, PLANT AND EQUIPMENT
    2009AccumulatedDepreciation and
    

    Net BookCost
    

    Amortization

    
    ValueLand and improvements
    
    $
    494.6
    
    
    $
    76.0
    
    
    $
    418.6Buildings and improvements
    
    
    1,546.1
    
    
    
    236.4
    
    
    
    1,309.7Machinery and equipment
    
    
    6,754.4
    
    
    
    2,307.4
    
    
    
    4,447.0Mine development costs
    
    
    329.9
    
    
    
    91.9
    
    
    
    238.0$
    9,125.0
    
    
    $
    2,711.7
    
    
    $
    6,413.3
 2008AccumulatedDepreciation and
    

    Net BookCost
    

    Amortization

    
    ValueLand and improvements
    
    $
    321.6
    
    
    $
    58.1
    
    
    $
    263.5Buildings and improvements
    
    
    950.2
    
    
    
    235.8
    
    
    
    714.4Machinery and equipment
    
    
    5,842.2
    
    
    
    2,160.3
    
    
    
    3,681.9Mine development costs
    
    
    224.8
    
    
    
    72.4
    
    
    
    152.4$
    7,338.8
    
    
    $
    2,526.6
    
    
    $
    4,812.2
     NOTE 8 INVESTMENTS




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   92 NOTE 8 INVESTMENTS continued
 2009
    
    
    2008Investments at equitySociedad Quimica y Minera
de Chile S.A. (SQM)
 32 percent ownership; quoted market value of $3,400.0
    
    $
    631.8
    
    
    $
    647.2Arab Potash Company (APC)
 28 percent ownership; quoted market value of $1,152.4
    
    
    348.8
    
    
    
    321.6Other
    
    
    19.8
    
    
    
    19.8Available-for-sale investmentsSinofert  22 percent ownership
    
    
    864.2
    
    
    
    746.8Israel
Chemicals Ltd. (ICL)  11 percent ownership
    
    
    1,895.7
    
    
    
    998.1Auction rate securities
    
    
    
    
    
    
    17.2$
    3,760.3
    
    
    $
    2,750.7
 Investments at Equity
     Auction Rate Securities




---



##### 



93   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 9 OTHER ASSETS
 
   2009
    
    
    2008Accrued pension benefit asset (Note 15)
    
    $
    207.6
    
    
    $
    131.7Investment tax credits
    
    
    46.4
    
    
    
    12.1Ammonia catalysts  net of accumulated amortization of $9.3 (2008  $2.7)
    
    
    44.1
    
    
    
    37.0Upfront lease costs  net of accumulated amortization of $4.4 (2008  $3.4)
    
    
    22.5
    
    
    
    23.6Future income tax asset (Note 23)
    
    
    16.8
    
    
    
    Derivative instrument assets (Note 6)
    
    
    3.2
    
    
    
    11.5Deferred charges  net of accumulated amortization of $5.7 (2008  $20.9)
    
    
    1.8
    
    
    
    36.2Other  net of accumulated amortization of $NIL (2008  $14.6)
    
    
    17.5
    
    
    
    48.1$
    359.9
    
    
    $
    300.2
  NOTE 10 INTANGIBLE ASSETS AND GOODWILL
 
 Intangible Assets
  Goodwill
  2009
    
    
    2008Intangible assets net of accumulated amortization of
$30.6 (2008  $31.8)
    
    $
    20.0
    
    
    $
    21.5Goodwill net of accumulated amortization of $7.3
(2008  $7.3)
    
    $
    97.0
    
    
    $
    97.0
   NOTE 11 SHORT-TERM DEBT
 
 2009
    
    
    2008Commercial paper
    
    $
    727.0
    
    
    $
    324.8Credit facility
    
    
    
    
    
    
    1,000.0727.0
    
    
    
    1,324.8Less net unamortized debt cost
    
    
    
    
    
    
    (0.9
    )$
    727.0
    
    
    $
    1,323.9




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   94 NOTE 11 SHORT-TERM DEBT continued
  NOTE 12 PAYABLES AND ACCRUED CHARGES
 
 2009
    
    
    2008Trade accounts
    
    $
    506.8
    
    
    $
    359.5Accrued compensation
    
    
    47.4
    
    
    
    118.9Accrued interest
    
    
    42.9
    
    
    
    26.8Deferred revenue
    
    
    33.9
    
    
    
    48.0Dividends
    
    
    29.6
    
    
    
    29.9Current portion accrued environmental costs and asset retirement obligations
    
    
    22.6
    
    
    
    12.2Accrued deferred share units
    
    
    20.1
    
    
    
    13.8Other taxes
    
    
    8.9
    
    
    
    51.1Current portion pension and other post-retirement benefits
    
    
    8.3
    
    
    
    8.2Income taxes
    
    
    1.2
    
    
    
    469.1Other payables and other accrued charges
    
    
    57.6
    
    
    
    46.1$
    779.3
    
    
    $
    1,183.6
 NOTE 13 LONG-TERM DEBT
 
  2009
    
    
    2008Senior notes 17.750% notes due May 31, 2011
    
    $
    600.0
    
    
    $
    600.04.875% notes due March 1, 2013
    
    
    250.0
    
    
    
    250.05.250% notes due May 15, 2014
    
    
    500.0
    
    
    
    3.750% notes due September 30, 2015
    
    
    500.0
    
    
    
    6.500% notes due May 15, 2019
    
    
    500.0
    
    
    
    4.875% notes due March 30, 2020
    
    
    500.0
    
    
    
    5.875% notes due December 1, 2036
    
    
    500.0
    
    
    
    500.0Credit facilities
    
    
    
    
    
    
    400.0Other
    
    
    8.0
    
    
    
    8.23,358.0
    
    
    
    1,758.2Less net unamortized debt costs
    
    
    (42.4
    )
    
    
    (22.8
    )Add unamortized interest rate swap gains
    
    
    2.4
    
    
    
    3.93,318.0
    
    
    
    1,739.3Less current maturities
    
    
    (1.8
    )
    
    
    (0.2
    )Add current portion of amortization
    
    
    3.1
    
    
    
    0.4$
    3,319.3
    
    
    $
    1,739.5
 1
    
    Each series of senior notes is unsecured and has no sinking fund requirements prior
to maturity. Each series of notes is redeemable, in whole or in part, at the companys option at
any time prior to maturity for a price not less than the principal amount of the notes to be
redeemed, plus accrued and unpaid interest. Under certain conditions related to a change in
control, the company is required to make an offer to purchase all, or any part, of the senior
notes due 2014, 2015, 2019, 2020 and 2036 at 101 percent of the principal amount of the notes
repurchased, plus accrued and unpaid interest.




---



##### 



95   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 13 LONG-TERM DEBT continued
   2010
    
    $
    1.82011
    
    
    600.32012
    
    
    5.92013
    
    
    250.02014
    
    
    500.0Subsequent years
    
    
    2,000.0$
    3,358.0
 NOTE 14 COMMITMENTS
 
  Lease Commitments
  Purchase Commitments
     Capital Commitments
  Other Commitments
   Operating
    
    
    Purchase
    
    
    Capital
    
    
    OtherLeases
    
    
    Commitments
    
    
    Commitments
    
    
    Commitments
    
    
    Total2010
    
    $
    81.8
    
    
    $
    344.5
    
    
    $
    163.0
    
    
    $
    42.0
    
    
    $
    631.32011
    
    
    76.7
    
    
    
    168.0
    
    
    
    34.2
    
    
    
    29.4
    
    
    
    308.32012
    
    
    74.1
    
    
    
    92.9
    
    
    
    0.6
    
    
    
    22.2
    
    
    
    189.82013
    
    
    71.2
    
    
    
    62.6
    
    
    
    
    
    
    
    9.5
    
    
    
    143.32014
    
    
    68.1
    
    
    
    53.4
    
    
    
    
    
    
    
    3.5
    
    
    
    125.0Thereafter
    
    
    217.4
    
    
    
    189.6
    
    
    
    
    
    
    
    15.3
    
    
    
    422.3Total
    
    $
    589.3
    
    
    $
    911.0
    
    
    $
    197.8
    
    
    $
    121.9
    
    
    $
    1,820.0




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   96 NOTE 15 PENSION AND OTHER POST-RETIREMENT BENEFITS
 
     Pension Plans
 Canada
   United States
  Trinidad
  Other Post-Retirement Plans




---



##### 



97   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 15 PENSION AND OTHER POST-RETIREMENT BENEFITS continued
 Defined Benefit Plans
  Pension2009
    
    2008
    
    2007Incurred
    
    
    Matching
    
    
    Recognized
    
    
    Incurred
    
    
    Matching
    
    
    Recognized
    
    
    Incurred
    
    
    Matching
    
    
    Recognizedin Year
    
    
    Adjustments 1
    
    
    in Year
    
    
    in Year
    
    
    Adjustments 1
    
    
    in Year
    
    
    in Year
    
    
    Adjustments 1
    
    
    in YearCurrent service cost for benefits
earned during the year
    
    $
    17.3
    
    
    $
    
    
    
    $
    17.3
    
    
    $
    15.1
    
    
    $
    
    
    
    $
    15.1
    
    
    $
   15.3
    
    
    $
    
    
    
    $
    15.3Interest cost on projected
benefit obligation
    
    
    44.7
    
    
    
    
    
    
    
    44.7
    
    
    
    39.9
    
    
    
    
    
    
    
    39.9
    
    
    
    36.5
    
    
    
    
    
    
    
    36.5Return (loss) on plan assets
    
    
    (94.2
    )
    
    
    60.5
    
    
    
    (33.7
    )
    
    
    157.7
    
    
    
    (208.8
    )
    
    
    (51.1
    )
    
    
    (44.3
    )
    
    
    1.5
    
    
    
    (42.8
    )Actuarial loss (gain)
    
    
    57.5
    
    
    
    (32.1
    )
    
    
    25.4
    
    
    
    46.7
    
    
    
    (42.8
    )
    
    
    3.9
    
    
    
    (33.5
    )
    
    
    40.8
    
    
    
    7.3Termination benefits
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan amendments
    
    
    
    
    
    
    2.5
    
    
    
    2.5
    
    
    
    8.1
    
    
    
    (5.9
    )
    
    
    2.2
    
    
    
    0.3
    
    
    
    1.5
    
    
    
    1.8Curtailments
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Change in valuation allowance
    
    
    (15.8
    )
    
    
    
    
    
    
    (15.8
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of transitional
obligation
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    
    
    
    
    1.6
    
    
    
    1.6
    
    
    
    
    
    
    
    0.9
    
    
    
    0.9$
    9.4
    
    
    $
    31.2
    
    
    $
    40.6
    
    
    $
    267.2
    
    
    $
    (255.9
    )
    
    $
    11.3
    
    
    $
    (25.7
    )
    
    $
    44.7
    
    
    $
    19.0
 1
    
    Accounting adjustments to allocate costs to different periods so as to recognize the
long-term nature of employee future benefits. Other2009
    
    2008
    
    2007Incurred
    
    
    Matching
    
    
    Recognized
    
    
    Incurred
    
    
    Matching
    
    
    Recognized
    
    
    Incurred
    
    
    Matching
    
    
    Recognizedin Year
    
    
    Adjustments 1
    
    
    in Year
    
    
    in Year
    
    
    Adjustments 1
    
    
    in Year
    
    
    in Year
    
    
    Adjustments 1
    
    
    in YearCurrent service cost for benefits
earned during the year
    
    $
    6.1
    
    
    $
    
    
    
    $
    6.1
    
    
    $
    5.7
    
    
    $
    
    
    
    $
    5.7
    
    
    $
    6.1
    
    
    $
    
    
    
    $
    6.1Interest cost on projected
benefit obligation
    
    
    16.6
    
    
    
    
    
    
    
    16.6
    
    
    
    15.9
    
    
    
    
    
    
    
    15.9
    
    
    
    14.9
    
    
    
    
    
    
    
    14.9Actuarial loss (gain)
    
    
    24.1
    
    
    
    (19.2
    )
    
    
    4.9
    
    
    
    3.1
    
    
    
    (0.1
    )
    
    
    3.0
    
    
    
    
    
    
    
    16.4
    
    
    
    16.4Plan amendments
    
    
    (29.1
    )
    
    
    26.3
    
    
    
    (2.8
    )
    
    
    1.4
    
    
    
    (4.2
    )
    
    
    (2.8
    )
    
    
    (12.0
    )
    
    
    (2.9
    )
    
    
    (14.9
    )Curtailments
    
    
    (1.6
    )
    
    
    
    
    
    
    (1.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transitional obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    
    
    
    
    0.2
    
    
    
    0.2$
    16.1
    
    
    $
    7.1
    
    
    $
    23.2
    
    
    $
    26.1
    
    
    $
    (3.9
    )
    
    $
    22.2
    
    
    $
    9.0
    
    
    $
    13.7
    
    
    $
    22.7
 1
    
    Accounting adjustments to allocate costs to different periods so as to recognize the
long-term nature of employee future benefits.  Pension
    Other2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Discount rate  obligation, %
    
    
    5.85
    
    
    
    6.25
    
    
    
    6.50
    
    
    
    5.85
    
    
    
    6.25
    
    
    
    6.50Discount rate  expense, %
    
    
    6.25
    
    
    
    6.50
    
    
    
    5.85
    
    
    
    6.25
    
    
    
    6.50
    
    
    
    5.85Long-term rate of return on assets, %
    
    
    7.50
    
    
    
    8.00
    
    
    
    8.00
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aRate of increase in compensation levels, %
    
    
    4.00
    
    
    
    4.00
    
    
    
    4.00
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
 n/a = not applicable   2009
    
    
    2008
    
    
    2007Health-care cost trend rates assumed for next year, %
    
    
    6.00
    
    
    
    6.00
    
    
    
    6.00Ultimate health-care cost trend rate assumed, %
    
    
    6.00
    
    
    
    6.00
    
    
    
    6.00Year that the rate reaches the ultimate trend rate
    
    
    2009
    
    
    
    2008
    
    
    
    2007




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   98 NOTE 15 PENSION AND OTHER POST-RETIREMENT BENEFITS continued
     Pension
    
    
    Other
    
    
    Total2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Change in benefit obligationsBalance, beginning of year
    
    $
    698.0
    
    
    $
    623.4
    
    
    $
    266.0
    
    
    $
    251.8
    
    
    $
    964.0
    
    
    $
    875.2Service cost
    
    
    17.3
    
    
    
    15.1
    
    
    
    6.1
    
    
    
    5.7
    
    
    
    23.4
    
    
    
    20.8Interest cost
    
    
    44.7
    
    
    
    39.9
    
    
    
    16.6
    
    
    
    15.9
    
    
    
    61.3
    
    
    
    55.8Actuarial loss
    
    
    57.5
    
    
    
    46.7
    
    
    
    22.8
    
    
    
    3.1
    
    
    
    80.3
    
    
    
    49.8Foreign exchange rate changes
    
    
    6.5
    
    
    
    (3.5
    )
    
    
    3.6
    
    
    
    (3.4
    )
    
    
    10.1
    
    
    
    (6.9
    )Plan amendments
    
    
    
    
    
    
    8.1
    
    
    
    (29.1
    )
    
    
    1.4
    
    
    
    (29.1
    )
    
    
    9.5Benefits paid
    
    
    (31.5
    )
    
    
    (31.7
    )
    
    
    (8.5
    )
    
    
    (8.5
    )
    
    
    (40.0
    )
    
    
    (40.2
    )Termination benefits
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    Curtailments/Settlements
    
    
    (0.3
    )
    
    
    
    
    
    
    (1.6
    )
    
    
    
    
    
    
    (1.9
    )
    
    
    Balance, end of year
    
    
    792.4
    
    
    
    698.0
    
    
    
    275.9
    
    
    
    266.0
    
    
    
    1,068.3
    
    
    
    964.0Change in plan assetsFair value, beginning of year
    
    
    479.7
    
    
    
    638.2
    
    
    
    
    
    
    
    
    
    
    
    479.7
    
    
    
    638.2Actual (loss) return on plan assets
    
    
    94.2
    
    
    
    (157.7
    )
    
    
    
    
    
    
    
    
    
    
    94.2
    
    
    
    (157.7
    )Employer contributions
    
    
    106.0
    
    
    
    28.0
    
    
    
    8.5
    
    
    
    8.5
    
    
    
    114.5
    
    
    
    36.5Foreign exchange rate changes
    
    
    1.0
    
    
    
    2.9
    
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    2.9Settlements
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    Benefits paid
    
    
    (31.5
    )
    
    
    (31.7
    )
    
    
    (8.5
    )
    
    
    (8.5
    )
    
    
    (40.0
    )
    
    
    (40.2
    )Fair value, end of year
    
    
    649.1
    
    
    
    479.7
    
    
    
    
    
    
    
    
    
    
    
    649.1
    
    
    
    479.7Funded status
    
    
    (143.3
    )
    
    
    (218.3
    )
    
    
    (275.9
    )
    
    
    (266.0
    )
    
    
    (419.2
    )
    
    
    (484.3
    )Valuation allowance
    
    
    
    
    
    
    (15.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15.8
    )Unamortized net actuarial loss
    
    
    304.6
    
    
    
    326.9
    
    
    
    60.1
    
    
    
    42.4
    
    
    
    364.7
    
    
    
    369.3Unamortized prior service cost
    
    
    7.6
    
    
    
    9.4
    
    
    
    (37.2
    )
    
    
    (11.3
    )
    
    
    (29.6
    )
    
    
    (1.9
    )Unamortized transitional obligation
    
    
    2.6
    
    
    
    2.8
    
    
    
    
    
    
    
    
    
    
    
    2.6
    
    
    
    2.8Accrued pension and other post-retirement 
benefit asset (liability)
    
    $
    171.5
    
    
    $
    105.0
    
    
    $
    (253.0
    )
    
    $
    (234.9
    )
    
    $
    (81.5
    )
    
    $
    (129.9
    )Amounts included in:Other assets
(Note 9)
    
    $
    207.3
    
    
    $
    131.4
    
    
    $
    0.3
    
    
    $
    0.3
    
    
    $
    207.6
    
    
    $
    131.7LiabilitiesCurrent (Note 12)
    
    
    
    
    
    
    
    
    
    
    (8.3
    )
    
    
    (8.2
    )
    
    
    (8.3
    )
    
    
    (8.2
    )Long-term
    
    
    (35.8
    )
    
    
    (26.4
    )
    
    
    (245.0
    )
    
    
    (227.0
    )
    
    
    (280.8
    )
    
    
    (253.4
    )$
    171.5
    
    
    $
    105.0
    
    
    $
    (253.0
    )
    
    $
    (234.9
    )
    
    $
    (81.5
    )
    
    $
    (129.9
    )




---



##### 



99   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 15 PENSION AND OTHER POST-RETIREMENT BENEFITS continued
    2009
    
    
    2008Projected benefit obligation
    
    $
    730.6
    
    
    $
    661.5Accumulated benefit obligation
    
    
    658.3
    
    
    
    610.0Fair value of plan assets
    
    
    559.9
    
    
    
    416.1
 Sensitivity of Assumptions
  2009
    
    
    2008
    
    
    2007As reported:Benefit obligation
    
    $
    275.9
    
    
    $
    266.0
    
    
    $
    251.8Aggregate of service
and interest cost
    
    
    22.7
    
    
    
    21.6
    
    
    
    21.0Impact of increase of
1.0 percentage point:Benefit obligation
    
    
    42.8
    
    
    
    41.1
    
    
    
    36.9Aggregate of service
and interest cost
    
    
    4.3
    
    
    
    3.8
    
    
    
    3.9Impact of decrease of
1.0 percentage point:Benefit obligation
    
    
    (34.1
    )
    
    
    (32.9
    )
    
    
    (29.7
    )Aggregate of service
and interest cost
    
    
    (3.3
    )
    
    
    (3.0
    )
    
    
    (3.0
    )
  Plan Assets
  Asset Category
    
    Target
    
    
    2009
    
    
    2008Equity securities
    
    
    65
    %
    
    
    59
    %
    
    
    57
    %Debt securities
    
    
    35
    %
    
    
    41
    %
    
    
    43
    %Real estate
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   Defined Contribution Plans




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   100 NOTE 15 PENSION AND OTHER POST-RETIREMENT BENEFITS continued
  
 Cash Payments
  Estimated Future Benefit Payments
  OtherReduction due toPension
    
    Gross
    
    Medicare Part D Subsidy
    
    Net2010
    
    $
    37.8
    
    
    $
    10.7
    
    
    $
    0.6
    
    
    $
    10.12011
    
    
    37.1
    
    
    
    11.6
    
    
    
    0.7
    
    
    
    10.92012
    
    
    40.4
    
    
    
    12.3
    
    
    
    0.8
    
    
    
    11.52013
    
    
    43.2
    
    
    
    13.3
    
    
    
    0.9
    
    
    
    12.42014
    
    
    46.5
    
    
    
    14.3
    
    
    
    1.0
    
    
    
    13.32015-2019
    
    
    279.8
    
    
    
    87.7
    
    
    
    6.7
    
    
    
    81.0
 NOTE 16 ENVIRONMENTAL COSTS AND ASSET RETIREMENT OBLIGATIONS




---



##### 



101   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 16 ENVIRONMENTAL COSTS AND ASSET RETIREMENT OBLIGATIONS continued
    Site Assessment and Remediation Costs
  Environmental Operating Costs and Capital Expenditures
    2009
    
    
    2008Asset retirement obligations, beginning of year
    
    $
    127.5
    
    
    $
    116.6Liabilities incurred
    
    
    4.8
    
    
    
    6.7Liabilities settled
    
    
    (8.9
    )
    
    
    (7.5
    )Accretion expense
    
    
    6.3
    
    
    
    5.7Revisions in timing and
amount of estimated cash flows
    
    
    (3.0
    )
    
    
    6.0Asset retirement obligations, end of year
    
    
    126.7
    
    
    
    127.5Other environmental liabilities
    
    
    30.7
    
    
    
    18.1Less current portion (Note 12)
    
    
    (22.6
    )
    
    
    (12.2
    )$
    134.8
    
    
    $
    133.4




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   102 NOTE 17 SHARE CAPITAL
 
 Authorized
  2009
    
    
    2008
    
    
    2007Issued
    
    Consideration
    
    
    Consideration
    
    
    ConsiderationIssued, beginning of year
    
    $
    1,402.5
    
    
    $
    1,461.3
    
    
    $
    1,431.6Shares issued under option plans
    
    
    26.5
    
    
    
    45.4
    
    
    
    28.6Shares issued for dividend reinvestment plan
    
    
    1.3
    
    
    
    1.9
    
    
    
    1.1Shares repurchased
    
    
    
    
    
    
    (106.1
    )
    
    
    Issued, end of year
    
    $
    1,430.3
    
    
    $
    1,402.5
    
    
    $
    1,461.3
 2009
    
    
    2008
    
    
    2007Number of
    
    
    Number of
    
    
    Number ofCommon Shares
    
    
    Common Shares
    
    
    Common SharesIssued, beginning of year
    
    
    295,200,987
    
    
    
    316,411,209
    
    
    
    314,403,147Shares issued under option plans
    
    
    760,131
    
    
    
    1,627,378
    
    
    
    1,995,460Shares issued for dividend reinvestment plan
    
    
    14,432
    
    
    
    11,600
    
    
    
    12,602Shares repurchased
    
    
    
    
    
    
    (22,849,200
    )
    
    
    Issued, end of year
    
    
    295,975,550
    
    
    
    295,200,987
    
    
    
    316,411,209
 NOTE 18 CONTRIBUTED SURPLUS
 
 2009
    
    
    2008
    
    
    2007Balance, beginning of year
    
    $
    126.2
    
    
    $
    98.9
    
    
    $
    62.3Stock-based compensation
    
    
    23.3
    
    
    
    27.3
    
    
    
    36.6Balance, end of year
    
    $
    149.5
    
    
    $
    126.2
    
    
    $
    98.9
 NOTE 19 SEGMENT INFORMATION




---



##### 



103   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 19 SEGMENT INFORMATION continued
 2009Potash
    
    
    Phosphate
    
    
    Nitrogen
    
    
    All others
    
    
    ConsolidatedSales
    
    $
    1,315.8
    
    
    $
    1,374.4
    
    
    $
    1,286.5
    
    
    $
    
    
    
    $
    3,976.7Freight
    
    
    58.5
    
    
    
    83.4
    
    
    
    49.1
    
    
    
    
    
    
    
    191.0Transportation and distribution
    
    
    35.3
    
    
    
    37.9
    
    
    
    54.9
    
    
    
    
    
    
    
    128.1Net sales  third party
    
    
    1,222.0
    
    
    
    1,253.1
    
    
    
    1,182.5
    
    
    
    Cost of goods sold
    
    
    491.6
    
    
    
    1,149.3
    
    
    
    990.7
    
    
    
    
    
    
    
    2,631.6Gross margin
    
    
    730.4
    
    
    
    103.8
    
    
    
    191.8
    
    
    
    
    
    
    
    1,026.0Inter-segment sales
    
    
    
    
    
    
    
    
    
    
    66.0
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    40.1
    
    
    
    163.9
    
    
    
    99.2
    
    
    
    8.9
    
    
    
    312.1Goodwill
    
    
    
    
    
    
    
    
    
    
    96.6
    
    
    
    0.4
    
    
    
    97.0Assets
    
    
    4,708.3
    
    
    
    2,356.8
    
    
    
    1,688.6
    
    
    
    4,168.5
    
    
    
    12,922.2Additions to property, plant and equipment
    
    
    1,282.9
    
    
    
    339.9
    
    
    
    134.9
    
    
    
    6.1
    
    
    
    1,763.8
 2008Potash
    
    
    Phosphate
    
    
    Nitrogen
    
    
    All others
    
    
    ConsolidatedSales
    
    $
    4,068.1
    
    
    $
    2,880.7
    
    
    $
    2,497.7
    
    
    $
    
    
    
    $
    9,446.5Freight
    
    
    167.3
    
    
    
    101.1
    
    
    
    56.5
    
    
    
    
    
    
    
    324.9Transportation and distribution
    
    
    42.1
    
    
    
    39.4
    
    
    
    50.9
    
    
    
    
    
    
    
    132.4Net sales  third party
    
    
    3,858.7
    
    
    
    2,740.2
    
    
    
    2,390.3
    
    
    
    Cost of goods sold
    
    
    803.2
    
    
    
    1,625.7
    
    
    
    1,652.9
    
    
    
    
    
    
    
    4,081.8Gross margin
    
    
    3,055.5
    
    
    
    1,114.5
    
    
    
    737.4
    
    
    
    
    
    
    
    4,907.4Inter-segment sales
    
    
    
    
    
    
    23.1
    
    
    
    173.6
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    82.0
    
    
    
    140.5
    
    
    
    97.1
    
    
    
    7.9
    
    
    
    327.5Goodwill
    
    
    
    
    
    
    
    
    
    
    96.6
    
    
    
    0.4
    
    
    
    97.0Assets
    
    
    3,350.0
    
    
    
    2,283.0
    
    
    
    1,593.6
    
    
    
    3,022.2
    
    
    
    10,248.8Additions to property, plant and equipment
    
    
    831.1
    
    
    
    268.5
    
    
    
    94.5
    
    
    
    4.2
    
    
    
    1,198.3
 2007Potash
    
    
    Phosphate
    
    
    Nitrogen
    
    
    All others
    
    
    ConsolidatedSales
    
    $
    1,797.2
    
    
    $
    1,637.1
    
    
    $
    1,799.9
    
    
    $
    
    
    
    $
    5,234.2Freight
    
    
    178.1
    
    
    
    112.4
    
    
    
    55.6
    
    
    
    
    
    
    
    346.1Transportation and distribution
    
    
    39.1
    
    
    
    33.4
    
    
    
    51.6
    
    
    
    
    
    
    
    124.1Net sales  third party
    
    
    1,580.0
    
    
    
    1,491.3
    
    
    
    1,692.7
    
    
    
    Cost of goods sold
    
    
    667.7
    
    
    
    1,058.5
    
    
    
    1,156.6
    
    
    
    
    
    
    
    2,882.8Gross margin
    
    
    912.3
    
    
    
    432.8
    
    
    
    536.1
    
    
    
    
    
    
    
    1,881.2Inter-segment sales
    
    
    
    
    
    
    1.9
    
    
    
    112.3
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    71.7
    
    
    
    121.1
    
    
    
    88.2
    
    
    
    10.3
    
    
    
    291.3Goodwill
    
    
    
    
    
    
    
    
    
    
    96.6
    
    
    
    0.4
    
    
    
    97.0Assets
    
    
    1,809.6
    
    
    
    1,955.4
    
    
    
    1,646.4
    
    
    
    4,305.2
    
    
    
    9,716.6Additions to property, plant and equipment
    
    
    338.2
    
    
    
    176.2
    
    
    
    89.7
    
    
    
    3.1
    
    
    
    607.2




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   104 NOTE 19 SEGMENT INFORMATION continued
  Country of OriginCanada
    
    United States
    
    Trinidad
    
    Other
    
    Consolidated2009Sales to customers outside the companyCanada
    
    $
    64.0
    
    
    $
    120.1
    
    
    $
    
    
    
    $
    
    
    
    $
    184.1United States
    
    
    538.3
    
    
    
    1,559.0
    
    
    
    427.5
    
    
    
    
    
    
    
    2,524.8PhosChem (PhosChems 2009 sales volumes
were made to: India 61%,
Latin America
19%,  China 1%, other countries 10%, other Asian
countries 9%)
    
    
    
    
    
    
    242.0
    
    
    
    
    
    
    
    
    
    
    
    242.0Canpotex (Canpotexs 2009 sales volumes
were made to:
India 32%, Latin America 13%, China 6%,
 other Asian countries 43%, other countries 6%)
    
    
    613.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    613.7Mexico
    
    
    
    
    
    
    93.0
    
    
    
    9.4
    
    
    
    
    
    
    
    102.4Brazil
    
    
    39.0
    
    
    
    11.7
    
    
    
    10.3
    
    
    
    
    
    
    
    61.0Colombia
    
    
    20.8
    
    
    
    24.4
    
    
    
    36.5
    
    
    
    
    
    
    
    81.7Other Latin America
    
    
    40.0
    
    
    
    32.6
    
    
    
    47.0
    
    
    
    
    
    
    
    119.6Other
    
    
    
    
    
    
    31.8
    
    
    
    15.6
    
    
    
    
    
    
    
    47.4$
    1,315.8
    
    
    $
    2,114.6
    
    
    $
    546.3
    
    
    $
    
    
    
    $
    3,976.7Operating income
    
    $
    555.4
    
    
    $
    263.7
    
    
    $
    100.2
    
    
    $
    272.9
    
    
    $
    1,192.2Capital assets and goodwill
    
    $
    3,635.7
    
    
    $
    2,241.4
    
    
    $
    601.1
    
    
    $
    32.1
    
    
    $
    6,510.3Country of OriginCanada
    
    United States
    
    Trinidad
    
    Other
    
    Consolidated2008Sales to customers outside the companyCanada
    
    $
    150.6
    
    
    $
    210.2
    
    
    $
    
    
    
    $
    
    
    
    $
    360.8United States
    
    
    1,353.1
    
    
    
    2,992.3
    
    
    
    899.4
    
    
    
    
    
    
    
    5,244.8PhosChem (PhosChems
2008 sales
volumes were made to: India
57%, Latin America 21%, other Asian
countries 11%, other countries 11%)
    
    
    
    
    
    
    713.6
    
    
    
    
    
    
    
    
    
    
    
    713.6Canpotex (Canpotexs
2008 sales
volumes were made to:
  Latin America
25%, India 16%, China 13%, other Asian countries 39%, other
countries 7%)
    
    
    2,257.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,257.1Mexico
    
    
    51.2
    
    
    
    145.0
    
    
    
    10.5
    
    
    
    
    
    
    
    206.7Brazil
    
    
    105.3
    
    
    
    14.9
    
    
    
    
    
    
    
    47.5
    
    
    
    167.7Colombia
    
    
    47.0
    
    
    
    10.9
    
    
    
    66.5
    
    
    
    
    
    
    
    124.4Other Latin America
    
    
    100.8
    
    
    
    73.3
    
    
    
    62.7
    
    
    
    
    
    
    
    236.8Other
    
    
    3.0
    
    
    
    68.2
    
    
    
    63.4
    
    
    
    
    
    
    
    134.6$
    4,068.1
    
    
    $
    4,228.4
    
    
    $
    1,102.5
    
    
    $
    47.5
    
    
    $
    9,446.5Operating income
    
    $
    2,684.2
    
    
    $
    1,279.3
    
    
    $
    366.3
    
    
    $
    305.3
    
    
    $
    4,635.1Capital assets and goodwill
    
    $
    2,307.2
    
    
    $
    1,993.4
    
    
    $
    577.0
    
    
    $
    31.6
    
    
    $
    4,909.2




---



##### 



105   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 19 SEGMENT INFORMATION continued
 Country of OriginCanada
    
    United States
    
    Trinidad
    
    Other
    
    Consolidated2007Sales to customers outside the companyCanada
    
    $
    88.0
    
    
    $
    127.0
    
    
    $
    
    
    
    $
    
    
    
    $
    215.0United States
    
    
    764.7
    
    
    
    2,065.6
    
    
    
    661.6
    
    
    
    
    
    
    
    3,491.9PhosChem (PhosChems 2007 sales
volumes were made to: India 39%,
Latin America 36%,  China
5%, other countries
12%, other Asian countries 8%)
    
    
    
    
    
    
    264.6
    
    
    
    
    
    
    
    
    
    
    
    264.6Canpotex (Canpotexs 2007 sales volumes were made to:  China 26%, Latin
America 26%, India 10%, other Asian
countries 33%, other
countries 5%)
    
    
    782.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    782.7Mexico
    
    
    23.1
    
    
    
    81.8
    
    
    
    
    
    
    
    
    
    
    
    104.9Brazil
    
    
    70.3
    
    
    
    
    
    
    
    
    
    
    
    23.1
    
    
    
    93.4Colombia
    
    
    26.2
    
    
    
    10.4
    
    
    
    46.8
    
    
    
    
    
    
    
    83.4Other Latin America
    
    
    42.2
    
    
    
    21.5
    
    
    
    63.1
    
    
    
    
    
    
    
    126.8Other
    
    
    
    
    
    
    35.5
    
    
    
    36.0
    
    
    
    
    
    
    
    71.5$
    1,797.2
    
    
    $
    2,606.4
    
    
    $
    807.5
    
    
    $
    23.1
    
    
    $
    5,234.2Operating income
    
    $
    537.8
    
    
    $
    652.5
    
    
    $
    296.9
    
    
    $
    101.3
    
    
    $
    1,588.5Capital assets and goodwill
    
    $
    1,504.3
    
    
    $
    1,848.6
    
    
    $
    587.2
    
    
    $
    44.3
    
    
    $
    3,984.4
 NOTE 20 PROVINCIAL MINING AND OTHER TAXES
 
 2009
    
    
    2008
    
    
    2007Potash Production Tax
    
    $
    (8.7
    )
    
    $
    431.3
    
    
    $
    84.2Saskatchewan resource surcharge and other
    
    
    37.7
    
    
    
    112.1
    
    
    
    51.2$
    29.0
    
    
    $
    543.4
    
    
    $
    135.4
 NOTE 21 OTHER INCOME
 
 2009
    
    
    2008
    
    
    2007Share of earnings
of equity investees
    
    $
    133.7
    
    
    $
    255.8
    
    
    $
    76.2Dividend income
    
    
    71.7
    
    
    
    107.0
    
    
    
    58.1Gain on disposal of (provision
for)
auction rate securities (Note 8)
    
    
    115.3
    
    
    
    (88.8
    )
    
    
    (26.5
    )Gain on forward purchase
contract for shares in Sinofert
    
    
    
    
    
    
    25.3
    
    
    
    Other
    
    
    22.7
    
    
    
    34.2
    
    
    
    17.7$
    343.4
    
    
    $
    333.5
    
    
    $
    125.5




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   106 NOTE 22 INTEREST EXPENSE
 
 2009
    
    
    2008
    
    
    2007Interest expense onShort-term debt
    
    $
    26.5
    
    
    $
    28.5
    
    
    $
    8.7Long-term debt
    
    
    173.1
    
    
    
    94.9
    
    
    
    111.6Interest capitalized to property, plant and equipment
    
    
    (68.2
    )
    
    
    (42.9
    )
    
    
    (21.8
    )Interest income
    
    
    (10.5
    )
    
    
    (17.7
    )
    
    
    (29.8
    )$
    120.9
    
    
    $
    62.8
    
    
    $
    68.7
 NOTE 23 INCOME TAXES
 
     2009
    
    
    2008
    
    
    2007Income before income taxesCanada
    
    $
    506.1
    
    
    $
    2,579.7
    
    
    $
    495.5United States
    
    
    261.1
    
    
    
    1,359.7
    
    
    
    589.4Trinidad
    
    
    80.4
    
    
    
    341.2
    
    
    
    268.6Other
    
    
    223.7
    
    
    
    291.7
    
    
    
    166.3$
    1,071.3
    
    
    $
    4,572.3
    
    
    $
    1,519.8Federal and provincial statutory income tax rates
    
    
    31.06
    %
    
    
    32.07
    %
    
    
    35.55
    %Income tax at statutory rates
    
    $
    332.7
    
    
    $
    1,466.3
    
    
    $
    540.3Adjusted for the effect of:Recoveries upon Canadian tax rate reductions
    
    
    (7.6
    )
    
    
    
    
    
    
    (40.1
    )Tax reduction resulting from internal restructuring
    
    
    (119.2
    )
    
    
    
    
    
    
    Production-related deductions
    
    
    (24.4
    )
    
    
    (96.1
    )
    
    
    (17.6
    )Adjustment to prior years production-related deductions
    
    
    (47.6
    )
    
    
    (71.1
    )
    
    
    Stock-based compensation
    
    
    (1.8
    )
    
    
    (22.8
    )
    
    
    (0.1
    )Additional tax deductions
    
    
    (12.9
    )
    
    
    (13.4
    )
    
    
    (14.8
    )Impact of foreign tax rates
    
    
    (55.0
    )
    
    
    (27.6
    )
    
    
    (44.8
    )Tax rate differential on temporary differences
    
    
    (19.0
    )
    
    
    (26.7
    )
    
    
    (5.3
    )Foreign exchange adjustment
    
    
    21.9
    
    
    
    (84.7
    )
    
    
    35.6Change in valuation allowance
    
    
    (35.4
    )
    
    
    62.5
    
    
    
    (42.7
    )Other
    
    
    51.8
    
    
    
    (109.3
    )
    
    
    5.7Income tax expense
    
    $
    83.5
    
    
    $
    1,077.1
    
    
    $
    416.2




---



##### 



107   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 23 INCOME TAXES continued
  2009
    
    
    2008
    
    
    2007CanadaCurrent
    
    $
    31.0
    
    
    $
    516.3
    
    
    $
    154.1Future
    
    
    13.3
    
    
    
    137.5
    
    
    
    (17.6
    )United States  FederalCurrent
    
    
    (161.6
    )
    
    
    303.7
    
    
    
    32.4Future
    
    
    167.2
    
    
    
    (49.6
    )
    
    
    137.6United States  StateCurrent
    
    
    (20.5
    )
    
    
    45.9
    
    
    
    12.8Future
    
    
    13.5
    
    
    
    (13.9
    )
    
    
    0.7Trinidad and otherCurrent
    
    
    31.4
    
    
    
    129.0
    
    
    
    97.3Future
    
    
    9.2
    
    
    
    8.2
    
    
    
    (1.1
    )Income tax expense
    
    $
    83.5
    
    
    $
    1,077.1
    
    
    $
    416.2
  2009
    
    
    2008Future income tax assets:Tax loss carryforwards
    
    $
    101.8
    
    
    $
    120.4Accrued pension and other post-retirement benefits
    
    
    14.9
    
    
    
    15.3Investments
    
    
    
    
    
    
    41.1Derivative instruments
    
    
    64.1
    
    
    
    59.1Inventories
    
    
    
    
    
    
    37.8Other
    
    
    30.4
    
    
    
    28.4Valuation allowance
    
    
    (37.5
    )
    
    
    (72.9
    )Total future income tax assets
    
    
    173.7
    
    
    
    229.2Future income tax liabilities:Property, plant and equipment
    
    
    1,063.8
    
    
    
    832.4Long-term debt
    
    
    28.8
    
    
    
    29.2Investments
    
    
    16.6
    
    
    
    108.7Other
    
    
    29.4
    
    
    
    34.2Total future income tax liabilities
    
    
    1,138.6
    
    
    
    1,004.5Net future income tax liability
    
    $
    964.9
    
    
    $
    775.3Amounts included in:Prepaid expenses and other current assets (Note 5)
    
    $
    (17.6
    )
    
    $
    (18.9
    )Other assets (Note 9)
    
    
    (16.8
    )
    
    
    Future income tax liability
    
    
    999.3
    
    
    
    794.2$
    964.9
    
    
    $
    775.3




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   108 NOTE 24 NET INCOME PER SHARE
 
 2009
    
    
    2008
    
    
    2007Basic net income per share1Net income available to common shareholders
    
    $
    987.8
    
    
    $
    3,495.2
    
    
    $
    1,103.6Weighted average number of common shares
    
    
    295,580,000
    
    
    
    307,480,000
    
    
    
    315,641,000Basic net income per share
    
    $
    3.34
    
    
    $
    11.37
    
    
    $
    3.50Diluted net income per share1Net income available to common shareholders
    
    $
    987.8
    
    
    $
    3,495.2
    
    
    $
    1,103.6Weighted average number of common shares
    
    
    295,580,000
    
    
    
    307,480,000
    
    
    
    315,641,000Dilutive effect of stock options
    
    
    8,363,000
    
    
    
    9,958,000
    
    
    
    8,667,000Weighted average number of diluted common shares
    
    
    303,943,000
    
    
    
    317,438,000
    
    
    
    324,308,000Diluted net income per share
    
    $
    3.25
    
    
    $
    11.01
    
    
    $
    3.40
 1 Net income per share calculations are based on
full dollar and rounded share amounts.




---



##### 



109   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 25 STOCK-BASED COMPENSATION
 
    Stock Option Plans
 Plan
    
    
    Options Outstanding
    
    Vesting Period
    
    SettlementDirectors Plan
    
    
    
    202,050
    
    
    2 Years
    
    SharesOfficers and Employees Plan
    
    
    
    4,905,790
    
    
    2 Years
    
    Shares2005 Performance Option Plan
    
    
    
    2,386,335
    
    
    3 Years
    
    Shares2006 Performance Option Plan
    
    
    
    2,395,500
    
    
    3 Years
    
    Shares2007 Performance Option Plan
    
    
    
    1,702,350
    
    
    3 Years
    
    Shares2008 Performance Option Plan
    
    
    
    481,000
    
    
    3 Years
    
    Shares2009 Performance Option Plan
    
    
    
    636,400
    
    
    3 Years
    
    Shares
     Number of Shares Subject to Option
 Performance Option Plans
    
    
    Officers, Employees and Directors Plans2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Outstanding, beginning of year
    
    
    7,543,214
    
    
    
    7,896,600
    
    
    
    6,199,800
    
    
    
    5,306,142
    
    
    
    6,110,384
    
    
    
    8,105,844Granted
    
    
    641,400
    
    
    
    486,450
    
    
    
    1,730,550
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (561,829
    )
    
    
    (823,136
    )
    
    
    
    
    
    
    (198,302
    )
    
    
    (804,242
    )
    
    
    (1,995,460
    )Forfeited
    
    
    (21,200
    )
    
    
    (16,700
    )
    
    
    (33,750
    )
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of year
    
    
    7,601,585
    
    
    
    7,543,214
    
    
    
    7,896,600
    
    
    
    5,107,840
    
    
    
    5,306,142
    
    
    
    6,110,384




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   110 NOTE 25 STOCK-BASED COMPENSATION continued
 Weighted Average Exercise Price
 Performance Option Plans
    
    
    Officers, Employees and Directors Plans2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Outstanding, beginning of year
    
    $
    48.01
    
    
    $
    40.08
    
    
    $
    31.38
    
    
    $
    12.29
    
    
    $
    13.48
    
    
    $
    12.68Granted
    
    
    95.88
    
    
    
    198.07
    
    
    
    62.75
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    31.93
    
    
    
    30.94
    
    
    
    
    
    
    
    11.00
    
    
    
    12.63
    
    
    
    13.31Forfeited
    
    
    97.87
    
    
    
    57.42
    
    
    
    39.26
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of year
    
    $
    55.55
    
    
    $
    48.01
    
    
    $
    40.08
    
    
    $
    13.24
    
    
    $
    12.29
    
    
    $
    13.48
   Options Outstanding
    
    
    
    
    
    Options ExercisableRange of
    
    
    
    
    
    Weighted Average
    
    Weighted Average
    
    
    
    
    
    Weighted AverageExercise Prices
    
    Number
    
    Remaining Life in Years
    
    Exercise Price
    
    Number
    
    Exercise PriceOfficers and Employees
and Directors Plans$10.00 to $13.75
    
    
    3,184,556
    
    
    
    3
    
    
    $
    11.52
    
    
    
    3,184,556
    
    
    $
    11.52$13.76 to $17.50
    
    
    1,923,284
    
    
    
    2
    
    
    $
    16.09
    
    
    
    1,923,284
    
    
    $
    16.095,107,840
    
    
    
    3
    
    
    $
    13.24
    
    
    
    5,107,840
    
    
    $
    13.24Performance Option Plans$29.00 to $39.00
    
    
    4,781,835
    
    
    
    6
    
    
    $
    32.62
    
    
    
    4,781,835
    
    
    $
    32.62$55.00 to $65.00
    
    
    1,702,350
    
    
    
    7
    
    
    $
    63.79
    
    
    
    
    
    
    $
    $95.00 to $110.00
    
    
    636,400
    
    
    
    9
    
    
    $
    99.23
    
    
    
    
    
    
    $
    $190.00 to $200.00
    
    
    481,000
    
    
    
    8
    
    
    $
    196.46
    
    
    
    
    
    
    $
    7,601,585
    
    
    
    7
    
    
    $
    55.55
    
    
    
    4,781,835
    
    
    $
    32.6212,709,425
    
    
    
    5
    
    
    $
    38.54
    
    
    
    9,889,675
    
    
    $
    22.61
   Year of Grant2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Expected dividend
    
    $
    0.40
    
    
    $
    0.40
    
    
    $
    0.40
    
    
    $
    0.20
    
    
    $
    0.20Expected volatility
    
    
    48
    %
    
    
    34
    %
    
    
    29
    %
    
    
    30
    %
    
    
    28
    %Risk-free interest rate
    
    
    2.53
    %
    
    
    3.30
    %
    
    
    4.48
    %
    
    
    4.90
    %
    
    
    3.86
    %Expected life of options in years
    
    
    5.9
    
    
    
    5.8
    
    
    
    6.4
    
    
    
    6.5
    
    
    
    6.5




---



##### 



111   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 25 STOCK-BASED COMPENSATION continued
  Number of
    
    Weighted AverageShares Subject
    
    Grant-Dateto Option
    
    Fair ValueNonvested at January 1, 2009
    
    
    4,859,350
    
    
    $
    22.50Granted
    
    
    641,400
    
    
    
    42.42Vested
    
    
    (2,659,800
    )
    
    
    12.84Forfeited
    
    
    (21,200
    )
    
    
    38.30Nonvested at December 31, 2009
    
    
    2,819,750
    
    
    $
    36.02
   Other Plans
   NOTE 26 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT
 
  Financial Risks
  Credit Risk
  2009
    
    
    2008Cash and cash equivalents
    
    $
    385.4
    
    
    $
    276.8Receivables
    
    
    615.9
    
    
    
    1,189.9Derivative instrument assets
    
    
    9.0
    
    
    
    17.9Available-for-sale securities  auction
rate securities
    
    
    
    
    
    
    17.2
  
    
    Acceptable minimum counterparty credit ratings relating to the natural gas and foreign
currency derivative instrument assets, and cash and cash equivalents
    
    Daily counterparty settlement on natural gas derivative instruments based on prescribed
credit thresholds
    
    Exposure thresholds by counterparty on cash and cash equivalents




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   112 NOTE 26 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT continued
 
     2009
    
    
    2008130 days
    
    $
    20.1
    
    
    $
    33.33160 days
    
    
    0.7
    
    
    
    8.7Greater than 60 days
    
    
    0.7
    
    
    
    1.7$
    21.5
    
    
    $
    43.7
  2009
    
    
    2008Balance, beginning of year
    
    $
    7.7
    
    
    $
    5.9Provision for receivables
impairment
    
    
    1.3
    
    
    
    5.0Receivables written off during
the year as uncollectible (primarily
related to offshore
receivables)
    
    
    (0.6
    )
    
    
    (3.2
    )Balance, end of year
    
    $
    8.4
    
    
    $
    7.7
  Liquidity Risk
  
    
    Maintain an optimal capital structure
 
    
    Maintain an optimal credit rating that provides ease of access to the debt capital markets
 
    
    Maintain an optimal balance of short- and long-term maturities
 
    
    Maintain an optimal mix of exposure to fixed and floating interest rates
   Total
    
    
    Amount Outstanding
    
    
    AmountAmount
    
    
    and Committed
    
    
    AvailableCredit
facilities1
    
    $
    3,250.0
    
    
    $
    724.9
    
    
    $
    2,525.1Line of credit
    
    
    75.0
    
    
    
    32.9
    2
    
    
    42.1
 1
    
    The company has $750.0 available under a commercial paper program which is limited
to the availability of back-up funds under the credit facilities. Included in the amount
outstanding and committed is $724.9 of commercial paper. Per the terms of the agreements, the
commercial paper outstanding and committed, as applicable, is based on the US dollar balance or
equivalent thereof in lawful money of other currencies at the time of issue; therefore, subsequent
changes in the exchange rate applicable to Canadian dollar-denominated commercial paper have no
impact on this balance.2
    
    Letters of credit as described in Note 11.




---



##### 



113   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 26 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT continued
 
   Carrying Amountof Liability at
    
    Contractual
    
    Within 1
    
    1 to 3
    
    3 to 5
    
    Over 5December 31, 2009
    
    Cash Flows
    
    Year
    
    Years
    
    Years
    
    YearsShort-term debt obligations 1
    
    $
    727.0
    
    
    $
    727.6
    
    
    $
    727.6
    
    
    $
    
    
    
    $
    
    
    
    $
    Payables and accrued charges2
    
    
    653.4
    
    
    
    653.4
    
    
    
    653.4
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt obligations1
    
    
    3,358.0
    
    
    
    5,077.1
    
    
    
    196.2
    
    
    
    924.6
    
    
    
    1,009.1
    
    
    
    2,947.2Derivative financial instrument liabilitiesForeign currency derivatives
    
    
    (5.0
    )Outflow
    
    
    
    
    
    
    402.6
    
    
    
    402.6
    
    
    
    
    
    
    
    
    
    
    
    Inflow
    
    
    
    
    
    
    (407.6
    )
    
    
    (407.6
    )
    
    
    
    
    
    
    
    
    
    
    Natural gas hedging derivatives3
    
    
    174.7
    
    
    
    185.9
    
    
    
    51.3
    
    
    
    61.3
    
    
    
    28.4
    
    
    
    44.9
 1
    
    Contractual cash flows include contractual interest payments related to debt
obligations. Interest rates on variable rate debt are based on prevailing rates at December
31, 2009.2
    
    Excludes taxes, accrued interest, deferred revenues and current portions of accrued
environmental costs and asset retirement obligations and accrued pension and other post-retirement
benefits. Also excludes derivative financial instrument liabilities, which have been presented
separately.3
    
    Natural gas derivatives are subject to master netting agreements. Each counterparty
has margin requirements that may require the company to post collateral against liability balances.
 Market Risk
  Foreign Exchange Risk




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   114 NOTE 26 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT continued
 
  Foreign Exchange RiskCarrying Amount of
    
    5% increase in US$
    
    5% decrease in US$Asset (Liability)
    
    Income
    
    OCI
    
    Income
    
    OCI2009Available-for-sale investmentsICL (New Israeli shekels)
    
    $
    1,895.7
    
    
    $
    
    
    
    $
    (94.8
    )
    
    $
    
    
    
    $
    94.8Sinofert (Hong Kong dollars)
    
    
    864.2
    
    
    
    
    
    
    
    (43.2
    )
    
    
    
    
    
    
    43.2Short-term debt (CDN)
    
    
    (262.5
    )
    
    
    13.1
    
    
    
    
    
    
    
    (13.1
    )
    
    
    Accounts payable (CDN)
    
    
    (167.2
    )
    
    
    8.4
    
    
    
    
    
    
    
    (8.4
    )
    
    
    Foreign currency derivatives
    
    
    5.0
    
    
    
    (20.4
    )
    
    
    
    
    
    
    20.4
    
    
    
    2008Available-for-sale investmentsICL (New Israeli shekels)
    
    
    998.1
    
    
    
    
    
    
    
    (49.9
    )
    
    
    
    
    
    
    49.9Sinofert (Hong Kong dollars)
    
    
    746.8
    
    
    
    
    
    
    
    (37.3
    )
    
    
    
    
    
    
    37.3Short-term debt (CDN)
    
    
    (159.8
    )
    
    
    8.0
    
    
    
    
    
    
    
    (8.0
    )
    
    
    Accounts payable (CDN)
    
    
    (105.1
    )
    
    
    5.3
    
    
    
    
    
    
    
    (5.3
    )
    
    
    Foreign currency derivatives
    
    
    (51.6
    )
    
    
    (41.3
    )
    
    
    
    
    
    
    41.3
    
    
    
    
 Interest Rate Risk
    Interest Rate RiskCarrying Amount of
    
    Effect of 1% decrease
    
    Effect of 1% increaseAsset (Liability)
    
    in interest rates on income
    
    in interest rates on income2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008Variable rate instrumentsCash and cash equivalents
    
    $
    385.4
    
    
    $
    276.8
    
    
    $
    (3.9
    )
    
    $
    (2.8
    )
    
    $
    3.9
    
    
    $
    2.8Auction rate securities
    
    
    
    
    
    
    17.2
    
    
    
    
    
    
    
    (1.3
    )
    
    
    
    
    
    
    1.3Long-term debt obligations
    
    
    (5.9
    )
    
    
    (405.9
    )
    
    
    0.1
    
    
    
    4.1
    
    
    
    (0.1
    )
    
    
    (4.1
    )Short-term debt
obligations1
    
    
    
    
    
    
    (1,000.0
    )
    
    
    
    
    
    
    4.2
    
    
    
    
    
    
    
    (4.2
    )
 1
    
    Commercial paper is excluded from interest rate risk on short-term
obligations since interest rates are fixed for their stated period. The company is only exposed
to interest rate risk on the issuance of new commercial paper.




---



##### 



115   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 26 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT continued
 
 Price Risk
    Price RiskCarrying Amount of
    
    Effect of 10% decrease
    
    Effect of 10% increaseAsset (Liability)
    
    in prices on OCI
    
    in prices on OCI2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008Derivative instrumentsNatural gas hedging derivatives
    
    $
    (171.0
    )
    
    $
    (159.0
    )
    
    $
    (72.6
    )
    
    $
    (85.8
    )
    
    $
    72.8
    
    
    $
    85.8Available-for-sale investmentsIntercorporate investments
    
    
    2,759.9
    
    
    
    1,744.9
    
    
    
    (276.0
    )
    
    
    (174.5
    )
    
    
    276.0
    
    
    
    174.5
  Fair Value
   2009
    
    2008Carrying Amount
    
    Fair Value of
    
    Carrying Amount
    
    Fair Value ofof Asset (Liability)
    
    Asset (Liability)
    
    of Asset (Liability)
    
    Asset (Liability)Derivative instrument assetsNatural gas hedging derivatives
    
    $
    3.7
    
    
    $
    3.7
    
    
    $
    11.6
    
    
    $
    11.6Foreign currency derivatives
    
    
    5.3
    
    
    
    5.3
    
    
    
    6.3
    
    
    
    6.3InvestmentsAvailable-for-sale
    
    
    2,759.9
    
    
    
    2,759.9
    
    
    
    1,744.9
    
    
    
    1,744.9Auction rate securities
    
    
    
    
    
    
    
    
    
    
    17.2
    
    
    
    17.2Derivative instrument liabilitiesNatural gas hedging derivatives
    
    
    (174.7
    )
    
    
    (174.7
    )
    
    
    (170.6
    )
    
    
    (170.6
    )Foreign currency derivatives
    
    
    (0.3
    )
    
    
    (0.3
    )
    
    
    (57.9
    )
    
    
    (57.9
    )Long-term debtSenior notes
    
    
    (3,350.0
    )
    
    
    (3,505.6
    )
    
    
    (1,350.0
    )
    
    
    (1,322.1
    )Credit facilities and other
    
    
    (8.0
    )
    
    
    (8.0
    )
    
    
    (408.2
    )
    
    
    (408.2
    )




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   116 NOTE 26 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT continued
 
      Fair Value Measurements at Reporting Date Using:Carrying Amount
    
    Quoted Prices in
    
    
    
    
    
    Significantof Asset (Liability)
    
    Active Markets for
    
    Significant Other
    
    Unobservableat December 31,
    
    Identical Assets
    
    Observable Inputs
    
    InputsDescription
    
    2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Derivative instrument assetsNatural gas hedging derivatives
    
    $
    3.7
    
    
    $
    
    
    
    $
    1.2
    
    
    $
    2.5Foreign currency derivatives
    
    
    5.3
    
    
    
    
    
    
    
    5.3
    
    
    
    Available-for-sale securitiesIntercorporate investments
    
    
    2,759.9
    
    
    
    2,759.9
    
    
    
    
    
    
    
    Derivative instrument liabilitiesNatural gas hedging derivatives
    
    
    (174.7
    )
    
    
    
    
    
    
    (53.2
    )
    
    
    (121.5
    )Foreign currency derivatives
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    




---



##### 



117   PotashCorp 2009 Financial Review
  
  Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts NOTE 26 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT continued
 
 Fair Value Measurements at Reporting Date Using:Carrying Amount
    
    Quoted Prices in
    
    
    
    
    
    Significantof Asset (Liability)
    
    Active Markets for
    
    Significant Other
    
    Unobservableat December 31,
    
    Identical Assets
    
    Observable Inputs
    
    InputsDescription
    
    2008
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Derivative instrument assetsNatural gas hedging derivatives
    
    $
    11.6
    
    
    $
    
    
    
    $
    
    
    
    $
    11.6Foreign currency derivatives
    
    
    6.3
    
    
    
    
    
    
    
    6.3
    
    
    
    Available-for-sale securitiesIntercorporate investments
    
    
    1,744.9
    
    
    
    1,744.9
    
    
    
    
    
    
    
    Auction rate securities
    
    
    17.2
    
    
    
    
    
    
    
    
    
    
    
    17.2Derivative instrument liabilitiesNatural gas hedging derivatives
    
    
    (170.6
    )
    
    
    
    
    
    
    (48.2
    )
    
    
    (122.4
    )Foreign currency derivatives
    
    
    (57.9
    )
    
    
    
    
    
    
    (57.9
    )
    
    
    
 Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
 Auction Rate Securities
    
    
    Natural Gas Hedging Derivatives2009
    
    
    2008
    
    
    2009
    
    
    2008Balance, beginning of year
    
    $
    17.2
    
    
    $
    56.0
    
    
    $
    (110.8
    )
    
    $
    127.7Total gains or (losses) (realized and unrealized) before income taxesIncluded in earnings
    
    
    115.3
    
    
    
    (88.8
    )
    
    
    (48.6
    )
    
    
    17.4Included in other comprehensive income
    
    
    
    
    
    
    (23.1
    )
    
    
    (49.4
    )
    
    
    (229.4
    )Other1
    
    
    
    
    
    
    73.1
    
    
    
    
    
    
    
    Purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sales
    
    
    (132.5
    )
    
    
    
    
    
    
    
    
    
    
    Issues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlements
    
    
    
    
    
    
    
    
    
    
    66.0
    
    
    
    (26.5
    )Transfer out of Level 3
    
    
    
    
    
    
    
    
    
    
    23.8
    
    
    
    Balance, end of year December 31
    
    $
    
    
    
    $
    17.2
    
    
    $
    (119.0
    )
    
    $
    (110.8
    )Amount of total gains or (losses) for the year included in earnings
attributable to the change in unrealized gains or losses relating to
instruments still held at the reporting date
    
    $
    
    
    
    $
    (88.8
    )
    
    $
    (0.4
    )
    
    $
    (10.0
    )Gains and (losses) (realized and unrealized) included in earnings for the
year are reported in:Cost of goods sold
    
    $
    
    
    
    $
    
    
    
    $
    (48.6
    )
    
    $
    17.4Other income
    
    
    115.3
    
    
    
    (88.8
    )
    
    
    
    
    
    
    
 1
    
    Represents unrealized losses transferred from other comprehensive income to
earnings as a result of the other-than-temporary impairment of the securities.




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial StatementsIn millions of US dollars except share and per-share amounts
  
  PotashCorp 2009 Financial
Review   118 NOTE 27 CAPITAL MANAGEMENT
 
   2009
    
    
    2008Short-term debt and current portion
of long-term debt
    
    $
    728.8
    
    
    $
    1,324.1Long-term debt
    
    
    3,319.3
    
    
    
    1,739.5Total debt
    
    
    4,048.1
    
    
    
    3,063.6Less: cash and cash equivalents
    
    
    385.4
    
    
    
    276.8Net debt
    
    
    3,662.7
    
    
    
    2,786.8Shareholders equity
    
    
    6,500.7
    
    
    
    4,588.9Less: accumulated other
comprehensive income
    
    
    1,648.8
    
    
    
    657.9Adjusted shareholders equity
    
    
    4,851.9
    
    
    
    3,931.0Adjusted capital1
    
    $
    8,514.6
    
    
    $
    6,717.8
 1
    
    Adjusted capital = (total debt  cash and cash equivalents) +
(shareholders equity  accumulated other comprehensive income)
  2009
    
    
    2008Components of ratiosAdjusted EBITDA
    
    $
    1,389.0
    
    
    $
    5,030.0Net debt
    
    $
    3,662.7
    
    
    $
    2,786.8Adjusted interest expense
    
    $
    189.1
    
    
    $
    105.7Adjusted capital
    
    $
    8,514.6
    
    
    $
    6,717.8RatiosAdjusted EBITDA to adjusted interest expense
1
    
    
    7.3
    
    
    
    47.6Net debt to adjusted EBITDA2
    
    
    2.6
    
    
    
    0.6Net debt to adjusted capital 3
    
    
    43.0
    %
    
    
    41.5
    %
 1
    
    Adjusted EBITDA to
adjusted interest expense = adjusted EBITDA
(12 months ended) / adjusted interest expense
(12 months ended)2
    
    Net debt to adjusted EBITDA =
(total debt- cash and cash equivalents) /
adjusted EBITDA (12 months ended)3
    
    Net debt to adjusted capital =
(total debt  cash and cash equivalents) /
(total debt  cash and cash equivalents + total
shareholders equity  accumulated other
comprehensive income)
   2009
    
    
    2008Net income
    
    $
    987.8
    
    
    $
    3,495.2Income taxes
    
    
    83.5
    
    
    
    1,077.1Interest expense
    
    
    120.9
    
    
    
    62.8Depreciation and amortization
    
    
    312.1
    
    
    
    327.5Provision for (gain on disposal
of)
auction rate securities
    
    
    (115.3
    )
    
    
    88.8Gain on sale of assets
    
    
    
    
    
    
    (21.4
    )Adjusted EBITDA
    
    $
    1,389.0
    
    
    $
    5,030.0
 2009
    
    
    2008Interest expense
    
    $
    120.9
    
    
    $
    62.8Interest capitalized to
property, plant and equipment
    
    
    68.2
    
    
    
    42.9Adjusted interest expense
    
    $
    189.1
    
    
    $
    105.7




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##### 



119   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 28 CONTINGENCIES
 
 Canpotex
  Mining Risk
  Legal and Other Matters
  
    
    The company, along with other parties, has been notified by the US Environmental Protection
Agency (USEPA) of potential liability under the US federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA) with respect to certain soil and
groundwater conditions at a PCS Joint Venture blending facility in Lakeland, Florida and
certain adjoining former property. A Record of Decision (ROD) was issued on September 27,
2007 and provides for a remedy that requires excavation of impacted soils and interim
treatment of groundwater. The total remedy cost is estimated in the ROD to be $8.5.
 
    
    The USEPA has identified PCS Nitrogen, Inc. (PCS Nitrogen) as a potentially responsible
party with respect to a former fertilizer blending operation in Charleston, South Carolina,
known as the Planters Property or Columbia Nitrogen site, formerly owned by a company from
which PCS Nitrogen acquired certain other assets. The USEPA has requested reimbursement of
$3.0 of previously incurred response costs and the performance or financing of future site
investigation and response activities from PCS Nitrogen and other named potentially
responsible parties. In September 2005, Ashley II
of Charleston, L.L.C., the current owner of the Planters Property, filed a complaint in the United
States District Court for the District of South Carolina seeking a declaratory judgment that PCS
Nitrogen is liable to pay environmental response costs that Ashley II of Charleston, L.L.C.
alleges it has incurred and will incur in connection with response activities at the site. Until
the district court proceedings and any subsequent appeals are concluded, PCS Nitrogen is unable to
evaluate with reasonable certainty the extent of any liability it may have in this matter.
 
    
    PCS Phosphate has agreed to participate, on a non-joint and several basis, with parties to an
Administrative Settlement Agreement with the USEPA (Settling Parties) in the performance of
a removal action and the payment of certain other costs associated with PCB soil contamination
at the Ward Superfund Site in Raleigh, North Carolina (Site), including reimbursement
of the USEPAs past costs. The removal activities commenced at the Site in August 2007. The cost
of performing the removal action at the Site is estimated at $70.0. The Settling Parties have
initiated CERCLA cost recovery litigation against PCS Phosphate and more than 100 other entities.
PCS Phosphate filed crossclaims and counterclaims seeking cost recovery. In addition to the
removal action at the Site, investigation of sediments downstream of the Site in what is called
Operable Unit 1 has occurred. In September 2008, the USEPA issued a final remedy for Operable
Unit 1, with an estimated cost of $6.1. In response to a special notice letter from the USEPA to
PCS Phosphate and other alleged potentially responsible parties regarding the remedy for Operable
Unit 1, two different groups of potentially responsible parties, one of which included PCS
Phosphate, made good-faith offers to perform and/or pay for the actions described in the special
notice letter. At this time, the company is unable to evaluate the extent of any exposure that it
may have for the matters addressed in the special notice letter.
 
    
    Pursuant to the 1996 Corrective Action Consent Order (the Order) executed between PCS
Nitrogen Fertilizer, L.P., formerly known as Arcadian Fertilizer, L.P. (PCS Nitrogen
Fertilizer) and Georgia Department of Natural Resources, Environmental Protection Division
(GEPD) in conjunction with PCS Nitrogen Fertilizers purchase of real property located in
Augusta, Georgia, PCS Nitrogen Fertilizer agreed to perform certain activities including a
facility investigation and, if necessary, a corrective action. PCS Nitrogen Fertilizer has
performed an investigation of environmental site conditions, has documented its findings in
several successive facility investigation reports submitted to GEPD and has conducted a pilot
study to evaluate the viability of in-situ bioremediation of groundwater at the site. In May
2009, PCS Nitrogen Fertilizer submitted a Corrective Action Plan (CAP) to GEPD proposing to
utilize in-situ bioremediation of groundwater at the site. In the event GEPD approves the CAP,
a full-scale bioremediation remedy will be implemented.
 
    
    In December 2009, a routine inspection of a gypsum stack at the White Springs, Florida
facility discovered a sinkhole that resulted in the loss of approximately 84 million gallons
of water from the stack. The company is sampling production and monitoring wells on its
property and drinking water wells on neighboring property to assess impacts. The Florida
Department of Environmental Protection (FDEP) issued a notice to the company stating that
the release may constitute an unauthorized discharge. The company is unable at this time to
estimate with certainty the total costs that may be incurred to address this matter.




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial
Statements
In millions of US dollars except share and per-share amounts
  

PotashCorp 2009 Financial
Review   120 NOTE 28 CONTINGENCIES continued
 
  
    
    The USEPA has notified the company of various alleged violations of the US Resource
Conservation and Recovery Act (RCRA) at its Aurora, North Carolina, White Springs, Florida
and Geismar, Louisiana plants. The company has entered into RCRA 3013 Administrative Orders on
Consent and has performed certain site assessment activities at its White Springs, Aurora and
Geismar plants. The company is uncertain if any resolution will be possible without
litigation, or, if litigation occurs, what the outcome would be. At this time, the company is
unable to evaluate the extent of any exposure that it may have in these matters.
 
    
    The USEPA has notified the company of various alleged violations of the Clean Air Act at its
Geismar, Louisiana and Lima, Ohio plants. With respect to the Geismar matter, the government
has demanded process changes and penalties that would cost a total of approximately $20.0, but
the company denies that it has any liability for the Geismar matter. The company is uncertain
if any resolution will be possible without litigation, or, if litigation occurs, what the
outcome would be. At this time, the company is unable to evaluate the extent of any exposure
that it may have in these matters.
 
    
    Significant portions of the companys phosphate reserves in Aurora, North Carolina are
located in wetlands. Under the Clean Water Act, the company must obtain a permit from the US
Army Corps of Engineers (the Corps) before mining in the wetlands. On January 15, 2009, the
Division of Water Quality of the North Carolina Department of Natural Resources issued a
certification under Section 401 of the Clean Water Act, 33 U.S.C. § 1341, that mining of
phosphate in excess of thirty years from lands owned or controlled by the company, including
some wetlands, would not degrade water quality. Thereafter, on June 10, 2009, the Corps issued
the company a permit that will allow the company to mine the phosphate deposits identified in
the
401 certification. USEPA decided not to seek additional review of the permit. On March 12, 2009,
four environmental organizations (Pamlico-Tar River Foundation, North Carolina Coastal Federation,
Environmental Defense Fund and Sierra Club) filed a Petition for a Contested Case Hearing before
the North Carolina Office of Administrative Hearings challenging the 401 certification. The
company has intervened in this proceeding and, at this time, is unable to evaluate the extent of
any exposure that it may have in this matter.
 
    
    In May 2009, the Canadian government announced that its new industrial greenhouse gas
emissions policies will be coordinated with policies that may be implemented in the US. In
July 2009, the Canadian government adopted rules requiring the reporting of specified
greenhouse gas emissions from sources that emit more than 50,000 tons of carbon dioxide
equivalents. In September 2009, the USEPA promulgated rules requiring the reporting of
greenhouse gas emissions for all fuel combustion sources emitting more than 25,000 tons of
carbon dioxide equivalents and certain other listed sources. The company does not believe that
compliance with these emission reporting regulations will have a material adverse effect on
its consolidated financial position. In December 2009, the USEPA issued a finding that
greenhouse gas emissions from mobile sources endanger public health and welfare. The
company is monitoring these developments and, except as indicated above, their effect on its
operations cannot be determined with certainty at this time.
 
    
    At the direction of the USEPA, the FDEP has announced a rulemaking to restrict nutrient
concentrations in surface waters to levels below those currently permitted at the companys
White Springs, Florida plant. In addition, the company, along with other phosphate producers
through a trade association, has moved to intervene to challenge a consent decree filed in the
US District Court for the Northern District of Florida which would require the USEPA to
develop numeric nutrient standards for Florida lakes and flowing waters by October 2010. The
company will also participate in the upcoming USEPA rulemaking process on the development of
nutrient standards for Florida surface waters. The company is uncertain if any resolution will
be possible without litigation, or, if litigation occurs, what the outcome would be.
 
    
    The company, having been unable to agree with Mosaic Potash Esterhazy Limited Partnership
(Mosaic) on the remaining amount of potash that the company is entitled to receive from
Mosaic pursuant to the mining and processing agreement in respect of the companys rights at
the Esterhazy mine, issued a Statement of Claim in the Saskatchewan Court of Queens Bench
against Mosaic on May 27, 2009. In the Statement of Claim, the company has asserted that it
has the right under the mining and processing agreement to receive potash from Mosaic until at
least 2012, and seeks an order from the Court declaring the amount of potash which the company
has the right to receive. Mosaic in its Statement of Defence dated June 16, 2009 asserts that
at a delivery rate of 1.24 million tons of product per year, the companys entitlement to
receive potash under the mining and processing agreement will terminate by August 30, 2010.
Also, on June 16, 2009, Mosaic commenced a counterclaim against the company asserting that the
company has breached the mining and processing agreement due to its refusal to take delivery
of potash product under the agreement based on an event of force majeure. The company will
continue to assert its position in these proceedings vigorously and it denies liability to
Mosaic in connection with its counterclaim.
 
    
    Between September 11 and October 2, 2008, the company and PCS Sales (USA), Inc. were named as
defendants in eight very similar antitrust complaints filed in federal courts. Other potash
producers are also defendants in these cases. Each of the separate complaints alleges
conspiracy to fix potash prices, to divide markets, to restrict supply and to fraudulently
conceal the conspiracy, all in violation of Section 1 of the Sherman Act. The company and PCS
Sales (USA), Inc. believe each of these eight private antitrust law lawsuits is without merit
and intend to defend them vigorously.




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##### 



121   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 28 CONTINGENCIES continued
 
    NOTE 29 GUARANTEES




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##### 



Notes to the PotashCorp 2009 Consolidated Financial
Statements
In millions of US dollars except share and per-share amounts
  

PotashCorp 2009 Financial
Review   122 NOTE 30 RELATED PARTY TRANSACTIONS
 
   NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
 
  (a) Inventory valuation:
 (b) Long-term investments:
  (c) Property, plant and equipment and goodwill:
 (d) Depreciation and amortization:
 (e) Exploration costs:
 (f) Pension and other post-retirement benefits:
  (g) Foreign currency translation adjustment:




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##### 



123   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
  (h) Offsetting of certain amounts:
 (i) Stock-based compensation:
  Performance
    
    Service Period CommencedOption Plan Year
    
    CDN GAAP
    
    US GAAP2006
    
    January 1, 2006
    
    May 4, 20062007
    
    January 1, 2007
    
    May 3, 20072008
    
    January 1, 2008
    
    May 8, 20082009
    
    January 1, 2009
    
    May 7, 2009
  (j) Stripping costs:
 (k) Income taxes related to the above adjustments:
 (I) Income tax consequences of stock-based employee compensation:
 (m) Income taxes related to uncertain income tax positions:
 (n) Cash flow statements:




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##### 



Notes to the PotashCorp 2009 Consolidated Financial
Statements
In millions of US dollars except share and per-share amounts
  

PotashCorp 2009 Financial
Review   124 NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
  2009
    
    
    2008
    
    
    2007Net income as reported  Canadian GAAP
    
    $
    987.8
    
    
    $
    3,495.2
    
    
    $
    1,103.6Items increasing (decreasing) reported net incomeInventory valuation (a)
    
    
    (1.7
    )
    
    
    
    
    
    
    Depreciation and amortization (d)
    
    
    8.4
    
    
    
    8.4
    
    
    
    8.5Stock-based compensation (i)
    
    
    2.0
    
    
    
    2.2
    
    
    
    (1.7
    )Stripping costs (j)
    
    
    (10.4
    )
    
    
    (4.0
    )
    
    
    (10.9
    )Exploration costs (e)
    
    
    (0.4
    )
    
    
    (6.6
    )
    
    
    Share of earnings of equity investees (b)
    
    
    (1.2
    )
    
    
    (1.0
    )
    
    
    (1.9
    )Pension and other post-retirement benefits (f)
    
    
    (15.8
    )
    
    
    (0.3
    )
    
    
    Deferred income taxes relating to the above adjustments (k)
    
    
    9.1
    
    
    
    (0.3
    )
    
    
    (1.9
    )Income taxes related to US GAAP effective income tax rate (k, m)
    
    
    22.1
    
    
    
    (52.0
    )
    
    
    (30.3
    )Income taxes related to stock-based compensation (I)
    
    
    (7.1
    )
    
    
    (32.7
    )
    
    
    (18.4
    )Income taxes related to uncertain income tax positions (m)
    
    
    3.3
    
    
    
    (13.7
    )
    
    
    14.5Net income  US GAAP
    
    $
    996.1
    
    
    $
    3,395.2
    
    
    $
    1,061.5Basic weighted average shares outstanding  US GAAP
    
    
    295,580,000
    
    
    
    307,480,000
    
    
    
    315,641,000Diluted weighted average shares outstanding  US GAAP
    
    
    303,943,000
    
    
    
    317,434,000
    
    
    
    324,292,000Basic net income per share  US GAAP
    
    $
    3.37
    
    
    $
    11.04
    
    
    $
    3.36Diluted net income per share  US GAAP
    
    $
    3.28
    
    
    $
    10.70
    
    
    $
    3.27Total assets as reported  Canadian GAAP
    
    $
    12,922.2
    
    
    $
    10,248.8Items increasing (decreasing) reported total assetsInventory (a)
    
    
    (1.7
    )
    
    
    Property, plant and equipment (c)
    
    
    (84.4
    )
    
    
    (92.8
    )Exploration costs (e)
    
    
    (13.4
    )
    
    
    (13.0
    )Stripping costs (j)
    
    
    (47.1
    )
    
    
    (36.7
    )Pension and other post-retirement benefits (f)
    
    
    (180.9
    )
    
    
    (105.2
    )Margin deposits associated with derivative instruments (h)
    
    
    (108.9
    )
    
    
    (91.1
    )Investment in equity investees (b)
    
    
    (4.0
    )
    
    
    1.3Income tax asset related to uncertain income tax positions (m)
    
    
    33.7
    
    
    
    24.8Goodwill (c)
    
    
    (46.7
    )
    
    
    (46.7
    )Total assets  US GAAP
    
    $
    12,468.8
    
    
    $
    9,889.4Total shareholders equity as reported  Canadian GAAP
    
    $
    6,500.7
    
    
    $
    4,588.9
    
    
    $
    6,018.7Items increasing (decreasing) reported shareholders equityIncome taxes related to uncertain income tax positions (m)
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    (1.2
    )Pension and other post-retirement benefits (f)
    
    
    (229.7
    )
    
    
    (246.6
    )
    
    
    (85.6
    )Share of accumulated other comprehensive income of equity investees (b)
    
    
    (1.9
    )
    
    
    
    
    
    
    Foreign currency translation adjustment (g)
    
    
    (20.9
    )
    
    
    (20.9
    )
    
    
    (20.9
    )Foreign currency translation adjustment (g)
    
    
    20.9
    
    
    
    20.9
    
    
    
    20.9Provision for asset impairment (c)
    
    
    (218.0
    )
    
    
    (218.0
    )
    
    
    (218.0
    )Inventory valuation (a)
    
    
    (1.7
    )
    
    
    
    
    
    
    Depreciation and amortization (d)
    
    
    86.9
    
    
    
    78.5
    
    
    
    70.1Exploration costs (e)
    
    
    (13.4
    )
    
    
    (13.0
    )
    
    
    (6.4
    )Stripping costs (j)
    
    
    (47.1
    )
    
    
    (36.7
    )
    
    
    (32.7
    )Pension and other post-retirement benefits (f)
    
    
    
    
    
    
    15.8
    
    
    
    16.1Stock-based compensation (i)
    
    
    2.4
    
    
    
    
    
    
    
    Share of other comprehensive income of equity investees (b)
    
    
    0.1
    
    
    
    1.3
    
    
    
    2.3Deferred income taxes relating to the above adjustments (k)
    
    
    39.2
    
    
    
    30.1
    
    
    
    30.4Income taxes related to US GAAP effective income tax rate (k, m)
    
    
    (60.2
    )
    
    
    (82.3
    )
    
    
    (30.3
    )Income taxes related to uncertain income tax positions (m)
    
    
    89.8
    
    
    
    86.5
    
    
    
    14.5Cumulative effect adjustment to retained earnings in respect of uncertain
income tax positions
    
    
    
    
    
    
    
    
    
    
    85.7Shareholders equity  US GAAP
    
    $
    6,145.9
    
    
    $
    4,203.3
    
    
    $
    5,863.6




---



##### 



125   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 Supplemental US GAAP Disclosure
 Investments at Equity
  2009
    
    
    2008Current assets
    
    $
    2,655.2
    
    
    $
    3,366.5Non-current assets
    
    
        2,296.6
    
    
    
    1,763.1Current liabilities
    
    
    1,228.8
    
    
    
    2,124.1Non-current liabilities
    
    
    1,243.6
    
    
    
    716.2Minority interest
    
    
    46.4
    
    
    
    45.1
 2009
    
    
    2008
    
    
    2007Sales
    
    $
    3,756.9
    
    
    $
    7,571.1
    
    
    $
    3,624.4Gross profit
    
    
    839.4
    
    
    
    1,328.0
    
    
    
    510.5Income from continuing
operations and net income
    
    
    524.6
    
    
    
    949.4
    
    
    
    382.5
 Uncertainty in Income Taxes
  2009
    
    
    2008Balance, beginning of year
    
    $
    29.6
    
    
    $
    11.6Additions based on tax positions
 related to the current year
    
    
    0.4
    
    
    
    19.9Additions for tax positions of prior
years
    
    
    11.2
    
    
    
    76.8Reductions for tax positions of
prior years
    
    
    (11.7
    )
    
    
    (63.6
    )Settlements
    
    
    (3.4
    )
    
    
    (15.1
    )Balance, end of year
    
    $
    26.1
    
    
    $
    29.6
  YearsCanada
    
    2004-presentUS
    
    2007-presentTrinidad
    
    2004-presentBarbados
    
    2001-present
 Recent Accounting Pronouncements
 Disclosures About Derivative Instruments and Hedging Activities
  Fair Values of Derivative Instruments in the Consolidated Statements of Financial Position
 Derivative instrument assets (liabilities) 1
    
    Balance Sheet Location
    
    2009
    
    
    2008Derivatives
designated as hedging instrumentsNatural gas hedging derivatives
    
    Prepaid expenses and other current assets
    
    $
    0.5
    
    
    $
    0.1Natural gas hedging derivatives
    
    Other assets
    
    
    3.2
    
    
    
    11.5Natural gas hedging derivatives
    
    Current portion of derivative instrument liabilities
    
    
    (51.5
    )
    
    
    (50.2
    )Natural gas hedging derivatives
    
    Derivative instrument liabilities
    
    
    (123.2
    )
    
    
    (120.4
    )Total derivatives designated as hedging
instruments
    
    
    
    $
    (171.0
    )
    
    $
    (159.0
    )Derivatives not designated as hedging
instrumentsForeign currency derivatives
    
    Prepaid expenses and other current assets
    
    $
    5.3
    
    
    $
    6.3Foreign currency derivatives
    
    Current portion of derivative instrument
liabilities
    
    
    (0.3
    )
    
    
    (57.9
    )Total derivatives not designated as hedging
instruments
    
    
    
    $
    5.0
    
    
    $
    (51.6
    )
 1
    
    All fair value amounts are gross and exclude netted cash collateral balances.




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##### 



Notes to the PotashCorp 2009 Consolidated Financial
Statements
In millions of US dollars except share and per-share amounts
  

PotashCorp 2009 Financial
Review   126 NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 The Effect of Derivative Instruments on the Consolidated Statements of Operations for the
Year Ended December 31
 Derivatives in Cash Flow Hedging Relationships
 Amount of (Loss) Gain Recognized in OCI (Effective Portion)2009
    
    
    2008
    
    
    2007Natural gas hedging derivatives
    
    
    
    
    
    $
    (102.5
    )
    
    $
    (256.9
    )
    
    $
    39.8Amount of (Loss) Gain Reclassified FromAccumulated OCI Into Income (Effective Portion)Location of (Loss) Gain Reclassified From Accumulated OCI Into 
Income (Effective Portion)
    
    2009
    
    
    2008
    
    
    2007Cost of goods sold
    
    
    
    
    
    $
    (85.0
    )
    
    $
    22.8
    
    
    $
    48.1Amount of (Loss) Gain Recognized in Income (IneffectiveLocation of (Loss) Gain Recognized in Income
    
    
    
    
    
    Portion and Amount Excluded From Effectiveness Testing)(Ineffective Portion and Amount Excluded From Effectiveness Testing)
    
    
    
    
    
    2009
    
    
    2008
    
    
    2007Cost of goods sold
    
    
    
    
    
    $
    (0.2
    )
    
    $
    (9.9
    )
    
    $
    9.6Derivatives Not Designated as Hedging InstrumentsAmount of Gain (Loss) Recognized in IncomeLocation of Gain (Loss) Recognized in Income
    
    

    

    2009
    
    

    2008
    
    
    2007Foreign
currency
derivatives
    
    Foreign exchange gain (loss)
    
    
    

    $
    0.1
    
    

    $
    (86.5
    )
    
    $
    13.0Natural gas
derivatives
    
    Cost of goods sold
    
    
    

    
    0.9
    
    

    
    (0.1
    )
    
    
    1.2
 Pension Plan Asset Disclosure
   2009Investments
 at fair valueCash and cash equivalents
    
    $
    10.3Government and agency securities
    
    
    44.8Corporate debt instruments
    
    
    96.6Mortgage loans
    
    
    64.2Common stock
    
    
    115.0Mutual funds
    
    
    315.5Swaps
    
    
    (0.9
    )Other
    
    
    7.5Total Investments  at fair value
    
    
    653.0Cash
    
    
    2.1Accrued interest and dividends
    
    
    1.5Unsettled tradesReceivable
    
    
    4.5Payable
    
    
    (11.7
    )Plan assets
    
    $
    649.4




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##### 



127   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 The following investments represent 5% or more of the pension plan assets
    
    2009Intech Risk-Managed Large Cap Growth Fund LLC
    
    $
    63.7Vanguard Equity Index Fund
    
    
    95.9Standard Life Balanced Fund (Greystone)
    
    
    43.4
  Quoted Prices inActive Markets for
    
    Significant
    
    SignificantIdentical Assets
    
    Observable Inputs
    
    Unobservable InputsAsset Category
    
    Total
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)AssetsCash
    
    $
    2.1
    
    
    $
    2.1
    
    
    $

    
    
    $
Receivables
    
    
    6.0
    
    
    
    6.0
    
    
    
    
    
    
    
    SecuritiesCash equivalents
    
    
    10.3
    
    
    
    
    
    
    
    10.3
    
    
    
    Equities
    
    
    434.3
    
    
    
    192.5
    
    
    
    241.8
    
    
    
    Fixed income
    
    
    210.1
    
    
    
    
    
    
    
    207.1
    
    
    
    3.0OtherFutures
    
    
    0.3
    
    
    
    0.3
    
    
    
    
    
    
    
    Swaps
    
    
    25.9
    
    
    
    
    
    
    
    25.9
    
    
    
    Total assets at fair value
    
    $
    689.0
    
    
    $
    200.9
    
    
    $
    485.1
    
    
    $
    3.0LiabilitiesPayables
    
    
    11.7
    
    
    
    11.7
    
    
    
    
    
    
    
    SecuritiesOptions
    
    
    0.4
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    OtherFutures
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    Swaps
    
    
    26.9
    
    
    
    
    
    
    
    26.9
    
    
    
    Other financial instruments
    
    
    0.5
    
    
    
    
    
    
    
    0.5
    
    
    
    Total liabilities at fair value
    
    $
    39.6
    
    
    $
    12.1
    
    
    $
    27.5
    
    
    $
    Total pension plan assets
    
    $
    649.4
    
    
    $
    188.8
    
    
    $
    457.6
    
    
    $
    3.0
 Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
 Fixed IncomeBalance, beginning January 1, 2009
    
    $
    3.7Actual return on plan assetsRelating to assets still held at December 31, 2009
    
    
    1.1Relating to asset sold during the year ended December 31, 2009
    
    
    0.1Sales
    
    
    (1.7
    )Transfer in/out of Level 3
    
    
    (0.2
    )Balance, ending December 31, 2009
    
    $
    3.0




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial
Statements
In millions of US dollars except share and per-share amounts
  

PotashCorp 2009 Financial
Review   128 NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements
  Framework for Fair Value Measurement
  Fair Value Measurement in Inactive Markets and Distressed Transactions
  Other-Than-Temporary Impairment on Debt Securities
  Fair Value Disclosures
   Subsequent Events
  Variable Interest Entities




---



##### 



129   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 FASB Accounting Standards Codification
 FASB Accounting Standards Codification
 Stock-Based Compensation
     Derivative Instruments and Hedging Activities
   Pension and Other Post-Retirement Benefits
  Related Party Transactions




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial
Statements
In millions of US dollars except share and per-share amounts
  

PotashCorp 2009 Financial
Review   130 NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 Supplemental Schedules
  Supplemental Schedules of Consolidated Financial Position
  2009
    
    
    2008AssetsCurrent assetsCash and cash equivalents (b)
    
    $
    385.2
    
    
    $
    276.8Receivables (b, h)
    
    
    1,028.8
    
    
    
    1,098.8Inventories (a)
    
    
    631.5
    
    
    
    715.2Prepaid expenses and other current assets (b)
    
    
    124.7
    
    
    
    85.62,170.2
    
    
    
    2,176.4Property, plant and equipment (b, c, d, e, j)
    
    
    6,251.9
    
    
    
    4,669.4Investments (b)
    
    
    3,763.7
    
    
    
    2,752.0Other assets (f)
    
    
    179.0
    
    
    
    195.0Income taxes on uncertain income tax positions (k, m)
    
    
    33.7
    
    
    
    24.8Intangible assets
    
    
    20.0
    
    
    
    21.5Goodwill (c)
    
    
    50.3
    
    
    
    50.3$
    12,468.8
    
    
    $
    9,889.4LiabilitiesCurrent liabilitiesShort-term debt and current portion of long-term debt
    
    $
    728.8
    
    
    $
    1,324.1Payables and accrued charges (b, k)
    
    
    746.5
    
    
    
    1,175.4Current portion of derivative instrument liabilities (h)
    
    
    19.1
    
    
    
    77.71,494.4
    
    
    
    2,577.2Long-term debt
    
    
    3,319.3
    
    
    
    1,739.5Derivative instrument liabilities (h)
    
    
    47.0
    
    
    
    59.7Deferred income tax liability (k, I)
    
    
    823.8
    
    
    
    612.6Income taxes on uncertain income tax positions (k, m)
    
    
    63.8
    
    
    
    58.2Accrued pension and other post-retirement benefits (f)
    
    
    437.6
    
    
    
    502.3Accrued environmental costs and asset retirement obligations
    
    
    134.8
    
    
    
    133.4Other non-current liabilities and deferred credits (i)
    
    
    2.2
    
    
    
    3.26,322.9
    
    
    
    5,686.1Shareholders EquityShare capital
    
    
    1,430.3
    
    
    
    1,402.5Additional paid-in capital (I)
    
    
    258.4
    
    
    
    227.6Accumulated other comprehensive income
    
    
    1,395.1
    
    
    
    389.2Retained earnings
    
    
    3,062.1
    
    
    
    2,184.06,145.9
    
    
    
    4,203.3$
    12,468.8
    
    
    $
    9,889.4




---



##### 



131   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 Supplemental Schedules of Consolidated Operations and Retained Earnings
  2009
    
    
    2008
    
    
    2007Sales
    
    $
    3,976.7
    
    
    $
    9,446.5
    
    
    $
    5,234.2Less: Freight
    
    
    191.0
    
    
    
    324.9
    
    
    
    346.1Transportation and distribution
    
    
    128.1
    
    
    
    132.4
    
    
    
    124.1Cost of goods sold
    
    
    2,651.3
    
    
    
    4,077.8
    
    
    
    2,885.9Gross Margin
    
    
    1,006.3
    
    
    
    4,911.4
    
    
    
    1,878.1Selling and administrative
    
    
    181.4
    
    
    
    186.1
    
    
    
    213.6Provincial mining and other taxes
    
    
    29.0
    
    
    
    543.4
    
    
    
    135.4Foreign exchange (gain) loss
    
    
    (35.4
    )
    
    
    (126.0
    )
    
    
    70.2Share of earnings of equity investees
    
    
    (132.5
    )
    
    
    (254.8
    )
    
    
    (74.3
    )Other income
    
    
    (209.3
    )
    
    
    (71.1
    )
    
    
    (49.3
    )(166.8
    )
    
    
    277.6
    
    
    
    295.6Operating Income
    
    
    1,173.1
    
    
    
    4,633.8
    
    
    
    1,582.5Interest Expense
    
    
    120.9
    
    
    
    62.8
    
    
    
    68.7Income before Income Taxes
    
    
    1,052.2
    
    
    
    4,571.0
    
    
    
    1,513.8Income Taxes
    
    
    56.1
    
    
    
    1,175.8
    
    
    
    452.3Net Income
    
    
    996.1
    
    
    
    3,395.2
    
    
    
    1,061.5Retained Earnings, Beginning of Year
    
    
    2,184.0
    
    
    
    2,161.3
    
    
    
    1,124.7Repurchase of Common Shares
    
    
    
    
    
    
    (3,250.3
    )
    
    
    Cumulative Effect Adjustment in Respect
of Uncertain Income Tax Positions
    
    
    
    
    
    
    
    
    
    
    85.7Dividends
    
    
    (118.0
    )
    
    
    (122.2
    )
    
    
    (110.6
    )Retained Earnings, End of Year
    
    $
    3,062.1
    
    
    $
    2,184.0
    
    
    $
    2,161.3Net Income per Share  Basic
    
    $
    3.37
    
    
    $
    11.04
    
    
    $
    3.36Net Income per Share  Diluted
    
    $
    3.28
    
    
    $
    10.70
    
    
    $
    3.27Dividends per Share
    
    $
    0.40
    
    
    $
    0.40
    
    
    $
    0.35




---



##### 



Notes to the PotashCorp 2009 Consolidated Financial
Statements
In millions of US dollars except share and per-share amounts
  

PotashCorp 2009 Financial
Review   132 NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 Supplemental Schedules of Consolidated Comprehensive Income (Loss)
  2009
    
    
    2008
    
    
    2007Net Income
    
    $
    996.1
    
    
    $
    3,395.2
    
    
    $
    1,061.5Other comprehensive income (loss)Net increase (decrease) in unrealized gains on available-for-sale securities
    
    
    1,015.1
    
    
    
    (1,398.4
    )
    
    
    1,394.1Net (losses) gains on derivatives designated as cash flow hedges
    
    
    (102.6
    )
    
    
    (266.8
    )
    
    
    49.4Reclassification to income of net losses (gains) on cash flow hedges
    
    
    85.3
    
    
    
    (12.9
    )
    
    
    (57.8
    )Pension and other post-retirement benefits1
    
    
    32.0
    
    
    
    (257.9
    )
    
    
    56.4Unrealized foreign exchange gains (losses) on translation of self-sustaining
foreign operations
    
    
    13.1
    
    
    
    (10.0
    )
    
    
    6.7Share of other comprehensive income of equity investees
    
    
    (2.1
    )
    
    
    
    
    
    
    (1.3
    )Deferred income taxes related to other comprehensive income
    
    
    (34.9
    )
    
    
    264.0
    
    
    
    (108.6
    )Other Comprehensive Income (Loss)
    
    
    1,005.9
    
    
    
    (1,682.0
    )
    
    
    1,338.9Comprehensive Income
    
    $
    2,002.0
    
    
    $
    1,713.2
    
    
    $
    2,400.4
 1
    
    2009 comprised of amortization of net actuarial loss of
$4.4, amortization of prior service costs of $27.5 and amortization of
transitional obligation of $0.1. 
2008 comprised of amortization of net
actuarial loss of $(250.2), amortization of prior service costs of $(9.4)
and amortization of transitional obligation of $1.7.
 Supplemental Schedules of Consolidated Accumulated Other Comprehensive Income
  2009
    
    
    2008
    
    
    2007Accumulated other comprehensive income, beginning of year
    
    $
    389.2
    
    
    $
    2,071.2
    
    
    $
    733.5Other comprehensive income (loss), net of related income taxes
    
    
    1,005.9
    
    
    
    (1,682.0
    )
    
    
    1,338.9Cumulative effect adjustment in respect of uncertain income tax positions
    
    
    
    
    
    
    
    
    
    
    (1.2
    )Accumulated other comprehensive income, end of year
    
    $
    1,395.1
    
    
    $
    389.2
    
    
    $
    2,071.2
  2009
    
    
    2008
    
    
    2007Net unrealized gains on available-for-sale securities
    
    $
    1,750.4
    
    
    $
    761.8
    
    
    $
    2,098.7Net unrealized (losses) gains on derivatives designated as
cash flow hedges
    
    
    (111.4
    )
    
    
    (100.6
    )
    
    
    73.5Pension and
other post-retirement benefits 1
    
    
    (229.7
    )
    
    
    (246.6
    )
    
    
    (85.6
    )Share of other comprehensive income of equity investees
    
    
    (1.9
    )
    
    
    
    
    
    
    Unrealized foreign exchange gains (losses) on
self-sustaining foreign operations
    
    
    9.8
    
    
    
    (3.3
    )
    
    
    6.7Foreign currency translation adjustment
    
    
    (20.9
    )
    
    
    (20.9
    )
    
    
    (20.9
    )Cumulative effect adjustment in respect of uncertain income
tax positions
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    (1.2
    )Accumulated other comprehensive income, end of year
    
    $
    1,395.1
    
    
    $
    389.2
    
    
    $
    2,071.2
 1
    
    2009 comprised of unamortized net actuarial loss of
$(248.0), unamortized prior service costs of $20.1 and unamortized
transitional obligation of $(1.8). 
2008 comprised of unamortized net
actuarial loss of $(246.2), unamortized prior service costs of $1.4 and
unamortized transitional obligation of $(1.8). 
2007 comprised of
unamortized net actuarial loss of $(91.0), unamortized prior service
costs of $8.7 and unamortized transitional obligation of $(3.3).




---



##### 



133   PotashCorp 2009 Financial Review
    

Notes to the PotashCorp 2009 Consolidated Financial Statements

In millions of US dollars except share and per-share amounts NOTE 31 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
 
 Supplemental Schedules of Consolidated Cash Flow
  2009
    
    
    2008
    
    
    2007Operating ActivitiesNet income
    
    $
    996.1
    
    
    $
    3,395.2
    
    
    $
    1,061.5Adjustments to reconcile net income to cash provided by
operating activitiesDepreciation and amortization
    
    
    303.7
    
    
    
    319.1
    
    
    
    282.8Stock-based compensation
    
    
    27.5
    
    
    
    34.0
    
    
    
    40.3Loss (gain) on disposal of property, plant and equipment and
long-term investments
    
    
    7.7
    
    
    
    (27.1
    )
    
    
    7.9(Gain on disposal) provision for auction rate securities
    
    
    (115.3
    )
    
    
    88.8
    
    
    
    26.5Foreign exchange on deferred income tax
    
    
    (1.3
    )
    
    
    (106.4
    )
    
    
    52.4Provision for deferred income tax
    
    
    190.8
    
    
    
    148.2
    
    
    
    137.3Undistributed earnings of equity investees
    
    
    (7.1
    )
    
    
    (165.7
    )
    
    
    (33.7
    )Derivative instruments
    
    
    (62.0
    )
    
    
    48.7
    
    
    
    (21.1
    )Other long-term liabilities
    
    
    7.8
    
    
    
    2.6
    
    
    
    (57.9
    )Changes in non-cash operating working capitalReceivables
    
    
    53.3
    
    
    
    (593.7
    )
    
    
    (154.6
    )Inventories
    
    
    80.6
    
    
    
    (324.1
    )
    
    
    59.6Prepaid expenses and other current assets
    
    
    21.4
    
    
    
    (23.7
    )
    
    
    7.0Payables and accrued charges
    
    
    (613.5
    )
    
    
    174.3
    
    
    
    250.9Cash provided by operating activities
    
    
    889.7
    
    
    
    2,970.2
    
    
    
    1,658.9Investing ActivitiesAdditions to property, plant and equipment
    
    
    (1,736.9
    )
    
    
    (1,188.0
    )
    
    
    (595.6
    )Purchase of long-term investments
    
    
    (3.2
    )
    
    
    (445.6
    )
    
    
    (30.7
    )Proceeds from disposal of (purchase of investments in)
auction rate securities
    
    
    132.5
    
    
    
    
    
    
    
    (132.5
    )Proceeds from disposal of property, plant and
equipment and long-term investments
    
    
    19.4
    
    
    
    43.2
    
    
    
    4.5Other assets and intangible assets
    
    
    (54.1
    )
    
    
    (46.6
    )
    
    
    7.8Cash used in investing activities
    
    
    (1,642.3
    )
    
    
    (1,637.0
    )
    
    
    (746.5
    )Financing ActivitiesProceeds from long-term debt obligations
    
    
    4,108.7
    
    
    
    400.0
    
    
    
    1.5Repayment and issue costs of long-term debt obligations
    
    
    (3,561.3
    )
    
    
    (0.2
    )
    
    
    (403.6
    )Proceeds from (repayment of) short-term debt obligations
    
    
    403.2
    
    
    
    1,233.9
    
    
    
    (67.9
    )Dividends
    
    
    (116.9
    )
    
    
    (122.6
    )
    
    
    (93.6
    )Repurchase of common shares
    
    
    
    
    
    
    (3,356.4
    )
    
    
    Issuance of common shares
    
    
    20.2
    
    
    
    36.7
    
    
    
    26.6Income taxes related to stock-based compensation
    
    
    7.1
    
    
    
    32.7
    
    
    
    18.4Cash provided by (used in) financing activities
    
    
    861.0
    
    
    
    (1,775.9
    )
    
    
    (518.6
    )Increase (Decrease) in Cash and Cash Equivalents
    
    
    108.4
    
    
    
    (442.7
    )
    
    
    393.8Cash and Cash Equivalents, Beginning of Year
    
    
    276.8
    
    
    
    719.5
    
    
    
    325.7Cash and Cash Equivalents, End of Year
    
    $
    385.2
    
    
    $
    276.8
    
    
    $
    719.5Supplemental cash flow disclosure
Income taxes paid (n)
    
    $
    751.1
    
    
    $
    677.1
    
    
    $
    221.0
 NOTE 32 COMPARATIVE FIGURES




---



##### 



Shareholder Information
  

PotashCorp 2009 Financial
Review   134 Annual Meeting
    Dividends
   Ownership
  Corporate Offices
 Canada:
    
    US:Suite 500, 122  1st Ave S
    
    Suite 400, 1101 Skokie BlvdSaskatoon SK S7K 7G3 
Phone: (306) 933-8500
    
    Northbrook IL 60062 
Phone: (847) 849-4200
 Common Share Prices and Volumes
  Toronto Stock Exchange1
    
    
    New York Stock ExchangeHigh*
    
    
    Low*
    
    
    Volume
    
    
    High*
    
    
    Low*
    
    
    Volume2009
    
    Q1
    
    
    116.41
    
    
    
    82.17
    
    
    
    118,600,823
    
    
    
    95.46
    
    
    
    63.65
    
    
    
    784,178,478Q2
    
    
    135.00
    
    
    
    95.26
    
    
    
    78,997,282
    
    
    
    121.36
    
    
    
    77.14
    
    
    
    531,709,327Q3
    
    
    114.50
    
    
    
    93.72
    
    
    
    64,778,808
    
    
    
    102.29
    
    
    
    80.85
    
    
    
    483,185,272Q4
    
    
    130.00
    
    
    
    91.07
    
    
    
    65,168,682
    
    
    
    124.10
    
    
    
    83.75
    
    
    
    454,388,084Year 2009
    
    
    135.00
    
    
    
    82.17
    
    
    
    327,545,595
    
    
    
    124.10
    
    
    
    63.65
    
    
    
    2,253,461,1612008
    
    Q1
    
    
    167.80
    
    
    
    109.00
    
    
    
    103,153,851
    
    
    
    165.00
    
    
    
    105.52
    
    
    
    481,399,952Q2
    
    
    246.29
    
    
    
    155.03
    
    
    
    118,100,762
    
    
    
    241.62
    
    
    
    150.44
    
    
    
    725,191,906Q3
    
    
    231.28
    
    
    
    131.43
    
    
    
    111,838,148
    
    
    
    229.95
    
    
    
    126.49
    
    
    
    783,581,966Q4
    
    
    142.00
    
    
    
    61.81
    
    
    
    165,047,982
    
    
    
    133.44
    
    
    
    47.54
    
    
    
    1,153,295,676Year 2008
    
    
    246.29
    
    
    
    61.81
    
    
    
    498,140,743
    
    
    
    241.62
    
    
    
    47.54
    
    
    
    3,143,469,5002007
    
    Q1
    
    
    65.31
    
    
    
    51.92
    
    
    
    51,599,528
    
    
    
    56.35
    
    
    
    44.05
    
    
    
    221,025,369Q2
    
    
    86.21
    
    
    
    61.02
    
    
    
    51,480,129
    
    
    
    80.85
    
    
    
    52.82
    
    
    
    220,781,704Q3
    
    
    108.92
    
    
    
    76.96
    
    
    
    65,980,291
    
    
    
    109.40
    
    
    
    71.50
    
    
    
    189,289,076Q4
    
    
    148.89
    
    
    
    94.30
    
    
    
    67,978,612
    
    
    
    151.90
    
    
    
    97.36
    
    
    
    239,545,310Year 2007
    
    
    148.89
    
    
    
    51.92
    
    
    
    237,038,560
    
    
    
    151.90
    
    
    
    44.05
    
    
    
    870,641,459
 1
  NYSE Corporate Governance




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135   PotashCorp 2009 Financial Review
    

APPENDIX Market and Industry Data Statement
   Footnotes, Sources and Abbreviations
 Footnotes
 1
    
    PotashCorp % of World Capacity
    
    Source: Fertecon, British Sulphur, PotashCorp2
    
    # of Producing Countries
    
    Source: Fertecon3
    
    % of Government Control
    
    Source: Fertecon, British Sulphur, PotashCorp4
    
    Greenfield
    
    Definition: New operation built on undeveloped site5
    
    Time for Greenfield (including ramp-up)
    
    Source: Fertecon, PotashCorp6
    
    Cost of Greenfield
    
    Source: Fertecon, AMEC, PotashCorp
 Abbreviated Company Names and Sources*
 Agrifos
    
    Agrifos Fertilizer Inc., USAAgrium
    
    Agrium Inc. (TSX and NYSE: AGU), CanadaAPC
    
    Arab Potash Company Ltd. (Amman: ARPT),
JordanBelaruskali
    
    PA Belaruskali, BelarusBloomberg
    
    Bloomberg L.P., USABlue, Johnson
    
    Blue, Johnson & Associates, USABritish Sulphur
    
    British Sulphur Consultants, UKCanadian National
    
    Canadian National Railway Co. Railway (TSX: CNR, NYSE: CNI), CanadaCanpotex
    
    Canpotex Limited, CanadaCBOT
    
    Chicago Board of Trade, USACF Industries
    
    CF Industries, Inc. (NYSE: CF), USACP Rail
    
    Canadian Pacific Railway (TSX: CP), CanadaDoane
    
    Doane Advisory Services, USAEIA
    
    Energy Information Administration, USAFAI
    
    Fertilizer Association of India, IndiaFAO
    
    Food and Agriculture Organization of the United NationsFertecon
    
    Fertecon Limited and Fertecon Research Centre Limited, UKICL
    
    Israel Chemicals Ltd. (Tel Aviv: ICL), IsraelI FA
    
    International Fertilizer Industry Association, FranceIMF
    
    International Monetary Fund, USAInnophos
    
    Innophos Holdings, Inc. (NASDAQ: IPHS), USAIntrepid
    
    Intrepid Potash (NYSE: IPI), USAIPNI
    
    International Plant Nutrition Institute, USA
 K+S
    
    K+S Group (Xetra: SDF), GermanyKoch
    
    Koch Industries, Inc., USAMississippi Phosphates
    
    Mississippi Phosphates Corporation, USAMoodys
    
    Moodys Corporation (NYSE: MCO), USAMosaic
    
    The Mosaic Company (NYSE: MOS), USANYMEX
    
    New York Mercantile Exchange, USANYSE
    
    New York Stock Exchange, USAOCP
    
    Office Cherifien des Phosphates, MoroccoOMS
    
    Overseas Marine Service, USAPhosChem
    
    Phosphate Chemicals Export Association, Inc., USASilvinit
    
    JSC Silvinit, RussiaSimplot
    
    J.R. Simplot Company, USASinofert
    
    Sinofert Holdings Limited (HKSE, 0297. HK), ChinaSQM
    
    Sociedad Quimica y Minera de Chile S.A. (Santiago
Bolsa de Comercio Exchange, NYSE: SQM), ChileTerra
    
    Terra Industries, Inc. (NYSE: TRA), USATFI
    
    The Fertilizer Institute, USATogliatti
    
    OAO Togliatti Azot, RussiaTSX
    
    Toronto Stock Exchange, CanadaUralkali
    
    JSC Uralkali (LSE and RTS: URKA), RussiaUSDA
    
    US Department of Agriculture, USAVale
    
    Companhia Vale do Rio Doce (Bovespa: Vale), BrazilYara
    
    Yara International (Oslo: YAR), Norway




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APPENDIX
  

PotashCorp 2009 Financial
Review   136 Terms and Measures
 Glossary of Terms
 2009E
    
    2009 Estimate2010F
    
    2010 ForecastCAGR
    
    Compound Annual Growth RateCanpotex
    
    An export company owned by all Saskatchewan
producers of potash (PotashCorp, Mosaic and
Agrium).Consumption vs 
Demand
    
    Product applied vs product purchasedFOB
    
    Free on Board  cost of goods on board at
point of shipmentFSU
    
    The former Soviet UnionGDP
    
    Gross Domestic ProductLatin America
    
    South America, Central America, Caribbean
and MexicoLNG
    
    Liquefied Natural GasMMBtu
    
    Million British thermal unitsMMT
    
    Million tonnesNorth America
    
    The North American market includes Canada
and the United States.Offshore
    
    Offshore markets include all markets except
Canada and the US.Operational 
Capability
    
    Estimated annual achievable production
level.PhosChem
    
    An association formed under the
Webb-Pomerene Act for US exports of phosphate
fertilizer products. Members are PotashCorp and
Mosaic. PCS Sales is responsible for export
sales of liquid fertilizers for all PhosChem
members while Mosaic is responsible for sales
of solid fertilizers for members.PotashCorp
    
    Potash Corporation of Saskatchewan Inc.
(PCS) and its direct or indirect subsidiaries,
individually or in any combination, as
applicableState- or 
Subsidy-Controlled 
Production
    
    State-controlled: Operational control in
the hands of the state Subsidy-controlled: The
state provides subsidies which control the
economic viability of the operation
 Scientific Terms
 Nitrogen
    
    NH3
    
    ammonia (anhydrous), 82.2% NHN03
    
    nitric acid, 22% N (liquid)UAN
    
    nitrogen solutions, 28-32% N (liquid)Phosphate
    
    P2O5
    
    phosphoric acid (liquid)MGA
    
    merchant grade acid, 54%
P205 (liquid)DAP
    
    diammonium phosphate, 46%
P205 (solid)MAP
    
    monoammonium phosphate, 52%
P205 (solid)SPA
    
    superphosphoric acid, 70%
P205 (liquid)Monocal
    
    monocalcium phosphate, 48.1%
P205 (solid)Dical
    
    dicalcium phosphate, 42.4%
P205 (solid)DFP
    
    defluorinated phosphate, 41.2%
P205 (solid)STF
    
    silicon tetrafluoridePotash
    
    KCI
    
    potassium chloride, 60-63.2%
K20 (solid)
 Fertilizer MeasuresK20 tonne
    
    Measures the
potassium content of
fertilizers having
different chemical
analysesP205 tonne
    
    Measures the
phosphorus content of
fertilizers having
different chemical
analysesN tonne
    
    Measures the nitrogen
content of fertilizers
having different chemical
analysesProduct tonne
    
    Standard measure of
the weights of all types
of potash, phosphate and
nitrogen productsCurrency AbbreviationsCDN
    
    Canadian dollarEUR
    
    EuroJOD
    
    Jordanian dinarNOK
    
    Norwegian kroneRUB
    
    Russian rubleUSD
    
    United States dollar




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fact
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fact